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Netherlands to investigate 4,000 corporate tax deals

Netherlands to investigate 4,000 corporate tax deals

 

AMSTERDAM: The Netherlands has opened an investigation into 4,000 tax agreements struck with international companies after irregularities were found in a deal with Procter & Gamble.

As part of the Paradise Papers leaks, Dutch media reported that a Rotterdam official signed off on an agreement to help P&G divert profits to the Cayman Islands in 2008, saving the US consumer goods group $169m in Dutch tax. Such a deal would need the signature of at least two officials, according to Dutch law.

The revelation prompted the Dutch government to open an investigation into thousands of corporate tax deals signed by the government from 2014.

Menno Snel, secretary of state for finance, said “procedure was not followed” in the P&G case. “We don’t have any clues that it is a wrong ruling in itself,” he said in a letter to the Dutch parliament on Wednesday.

P&G is not under investigation and denies any wrongdoing. The company said: “P&G pays all the taxes we owe, worldwide, and we comply with the letter and spirit of the law everywhere we operate. We maintain the highest level of financial and tax reporting compliance and in doing so, we observe and adhere to the tax law, the underlying tax policy intent, and disclosure and reporting requirements worldwide.”  The company said it had asked for and received additional confirmation from the Dutch government that its interpretation of the tax arrangement was correct.

”P&G has fully transparent relationships with governments and tax administrations worldwide. As a best practice, we may seek confirmation from governments and tax administrations that our interpretation of tax laws is correct. This is what was done in this instance.”

The investigation is likely to shine a light on how the Netherlands taxes multinational companies. Dutch law allows corporate tax agreements, which are struck in secret to protect the privacy of the companies involved.