There will be a minimum tax on profits for multinationals and domestic companies with a turnover of more than 750 million euros. A bill to that effect, the Minimum Tax Act 2024, was presented to the House of Representatives yesterday. Companies would have to pay about 15 percent tax on their profits.
According to the government, this is an important measure to combat worldwide tax avoidance. ‘A complicated matter’, says Professor of Fiscal Economics Peter Kavelaars of Leiden University.
According to Kavelaars, this means that if, for example, less than 15 percent is levied abroad at one of the companies, the Netherlands will levy up to that 15 percent.
‘Whether the tax authorities have sufficient capacity for this, I have a hard head’
‘It’s not just the Netherlands that does that. Although it is Dutch legislation, it is based on a European directive, and ultimately it is intended to be rolled out worldwide.’
European guide line
According to Kavelaars, the Netherlands is not unique in this, because it is a European obligation. It also has to be done quickly because the law has to enter into force on 1 January. Incidentally, a levy of 15 percent will hardly occur within the European Union because the average rate within the Union is already 20 percent, but there are also tax haven-like countries where the rates are lower.
Low yield
According to Kavelaars, the proceeds of the bill are actually very low – the government expects to raise about 450 million on an annual basis. “That’s not much for such an incredibly complex and complicated bill.” Kavelaars thinks that an additional 50 million is levied annually. At the same time, it is assumed that the other 400 million Dutch-based companies that have moved to low-tax countries will bring that money back to the Netherlands. “But that’s very uncertain.”
‘The question is whether it all makes so much sense’
Kavelaars repeats what a complicated exercise this is – not only for the ficus, but also for tax advisors and accountants. After all, these are large concerns with many branches, so it is actually necessary to check for each partner whether that minimum percentage is being met.
