Coporate Tax Competition: A Dutch Perspective

Hofmann, Patricia; Riedel, Nadine

Zusammenfassung

A review of corporate tax policy in the Netherlands is provided, focusing in particular on international aspects and corporate tax competition. Empirical evidence shows that corporate tax policy is important and that it determines the international location of investment and profits of multinational enterprises (MNEs). In terms of tax policy instruments, especially low statutory corporate tax rates—more than narrow tax base definitions—attract internationally mobile business and profits. In addition, ‘smart tax competition’ elements of the Dutch tax system, such as the ‘innovation box’ and generous research and development (R&D) tax credits, help to attract R&D investments that may exert positive spill-over effects on the local economy. Recent tightening of anti-profit-shifting provisions through the European Union’s Anti-Tax Avoidance Directive (ATAD) and the OECD’s Base Erosion and Profit Shifting (BEPS) have not eliminated the incentives to engage in corporate tax competition, and the associated detrimental welfare effects, in consequence, prevail. If appropriately designed, further corporate tax policy coordination will likely be beneficial from a global and a Dutch perspective

Schlüsselwörter
tax competition, profit shifting, OECD, BEPS and ATAD initiatives, the Netherlands as conduit country, tax treaties, patent boxes, tax rulings, withholding taxes on interest, royalties and dividends, reform options for the Dutch corporate income tax