14 countries remain on the Dutch black list of low-tax countries published on 30 December 2019 in the Government Gazette. The list is part of the country’s fight against tax avoidance and targets countries with a profit tax rate of less than 9%. Barbados and Turkmenistan have now been added whereas Belize, Kuwait, Qatar and Saudi Arabia were removed from the Dutch tax black list.
The full list consists of Anguilla, Bahamas, Bahrain, Barbados, Bermuda, British Virgin Islands, Guernsey, Isle of Man, Jersey, Cayman Islands, Turkmenistan, Turks and Caicos Islands, Vanuatu and the United Arab Emirates.
The tax avoidance measures will also apply to countries that appear on the EU list of non-cooperative countries as far as not already included on the Dutch list. These are American Samoa, US Virgin Islands, Fiji, Guam, Oman, Trinidad and Tobago. In total therefore, The Dutch blacklist now includes 21 countries.
Barbados was added to the list because the tax rate has been lowered below 9% as of January 1, 2019. Turkmenistan is added because further analysis shows that the generally applicable income tax rate is not 20% but 8%. Local taxes for Saudi Arabia, Kuwait, Qatar and Belize, on the other hand, correspond to a profit tax with a rate of at least 9% according to further analysis from the Duthc tax administration. Unfortunately the United Arab Emirates maintained its presence on the list.
Dutch black list
Since January 1, 2019, the Netherlands has introduced a black list of countries with a low tax rate. In addition, there is also a blacklist from the European Union. The Dutch and EU list is used for three particular measures in the fight against tax avoidance.
First, the list is used for CFC purpose entered as of January 1, 2019 preventing companies from evading tax by shifting assets to an entity in a country on the black list. The list is also used for withholding tax on interest and royalties as of January 1, 2021. A recipient in a listed country will have to pay a tax of 21.7% on interest and royalties originating from the Netherlands. This is to prevent the Netherlands from being used as a conduit country or gate-way to jurisdictions that levy little or no tax. Thirdly, as of 1 July 2019, the Tax Authorities will no longer issue advance tax rulings on transactions with companies based in a listed country.
The Dutch list will be re-assessed and updated on an annual basis.