Merkies: new tax treaty puts Ethiopia at disadvantage

20 June 2013

Merkies: new tax treaty puts Ethiopia at disadvantage

SP Member of Parliament Arnold Merkies has major objections to the recently concluded taxation agreement with Ethiopia, which appears principally to promote the interests of multinational corporations. Merkies is anxious to see the treaty submitted to Parliament in order that greater justice can be accorded to Ethiopia’s position as a developing country. ‘The government has promised to give developing countries more space to collect badly-needed tax revenues, but this isn’t evident in this agreement. If this treaty stands as a model for taxation agreements with other developing countries, then these promises will turn out to have been worth very little.’

Arnold Merkies

‘In the Netherlands it’s highly unusual for taxation treaties to be dealt with in Parliament unless they’re with neighbouring countries,’ Merkies explains. ‘Nevertheless, I am calling for this to happen in this instance, because the treaty limits Ethiopia’s possibilities when it comes to collecting taxes and gives a free hand to post box firms established simply to avoid paying tax. Ethiopia will have little to gain by this agreement unless a number of important points are amended.’

The Netherlands has concluded a great many taxation agreements, including with developing countries. Under pressure from the Dutch side tax rates in these treaties are kept extremely low, while because the Netherlands makes it possible for multinationals to establish international constructions enabling them to avoid paying tax, developing countries miss out on a great deal of money. According to a recent enquiry from SOMO, the Netherlands-based Foundation for Research into Multinational Corporations, this amounts to a global annual sum estimated at €771billion.

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