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Netherlands Adds To Tax Blacklist

Tuesday, December 31, 2019

Barbados and Turkmenistan have been added to the Netherlands' list of low-tax jurisdictions for the purposes of enforcing certain anti-tax avoidance rules, the Dutch Ministry of Finance announced on December 30, 2019.

Jurisdictions named on the list, which have corporate tax rates of less than nine percent, fall within the scope of new Dutch controlled foreign companies (CFC) rules, which became effective from January 1, 2019, under the framework of the EU's Anti-Tax Avoidance Directive.

In addition, withholding tax equal to the Dutch headline corporate tax rate will be imposed on interest and royalty payments to these jurisdictions from 2021. The rate of corporate tax in 2021 is expected to be 21.7 percent.

Furthermore, as from July 1, 2019, the Dutch tax authorities will no longer issue tax rulings to companies which are established in a listed jurisdiction.

According to the Finance Ministry, Barbados has been added to the list because its corporate tax rate fell below nine percent as from January 1, 2019. Turkmenistan was added to the list after analysis showed that the generally applicable income tax rate is not 20 percent but eight percent, the ministry said.

Conversely, Saudi Arabia, Kuwait, Qatar, and Belize have been removed from the list after analysis revealed that their corporate taxes were above nine percent.

The changes mean that the jurisdictions on the Dutch tax blacklist are as follows: Anguilla, Bahamas, Bahrain, Barbados, Bermuda, the British Virgin Islands, Guernsey, the Isle of Man, Jersey, the Cayman Islands, Turkmenistan, the Turks and Caicos Islands, Vanuatu, and the United Arab Emirates.

The aforementioned anti-avoidance measures also apply to jurisdictions on the European Union's list of low-tax jurisdictions. This means that a further seven jurisdictions are currently on the Dutch list, including American Samoa, the US Virgin Islands, Fiji, Guam, Oman, and Trinidad and Tobago.

The Dutch blacklist is updated on an annual basis.