THE HAGUE, Netherlands (AP) — The Dutch government said Tuesday it plans to reform a business tax rule that allows wealthy multinationals to reduce the amount of tax they pay on their profits. The government said the plan, which has to be passed by parliament, will generate 265 million euros ($292 million) per year in new income.
The announcement follows public outrage at revelations this year that some multinationals paid little or no tax on their profits. Royal Dutch Shell confirmed in May that it paid no tax in the Netherlands last year on its profits, apart from at a natural gas joint venture, because it was able to offset profits with losses and costs made elsewhere in the world.
The Anglo-Dutch energy giant added that globally it paid more than $10 billion in taxes on its profits and said it pays taxes "within the letter and spirit of the law" in the Netherlands. Prime Minister Mark Rutte, speaking on Dutch television after the plan was unveiled as part of his government's agenda for the coming year, called the taxation rule "crazy."
"Companies have to pay a fair tax," Rutte said. Shell argues that its competitors and other multinationals benefit from similar tax systems elsewhere in the world. The Ministry of Finance said it plans to reform the system "so that companies can offset such losses less often and as a result will pay more tax."
The annual Dutch budget day, traditionally held on the third Tuesday of September, was kicked off by King Willem-Alexander issuing a "profit warning" for his country amid concerns about the effect of Brexit and global trade conflicts.
In the speech from the throne, written by Rutte's ruling coalition government, King Willem-Alexander said that the strong Dutch economy will enter a period of more moderate growth in coming years. In budget papers, the government said economic growth is expected to be 1.8% this year and ease to 1.5% in 2020.
The king said that the Dutch economy, which is reliant on exports, "is vulnerable to disruptions in the global market, particularly as a result of trade conflicts" and added that the looming "Brexit casts its shadow over the future."