It seems to take some getting used to: multinationals that voluntarily disclose their worldwide tax payments, their financial structures and the tax benefits they enjoy. Yet that is exactly what forty large Dutch companies promised on Wednesday when they signed a joint tax code.
The so-called Tax Governance Code was created on the initiative of employers’ organization VNO-NCW. The participating companies commit to publishing a clear tax strategy in future, will no longer use tax havens and will also disclose exactly how much tax they pay in each country where they operate.
Unilever, ASML, Philips, KLM and Heineken, among others, have signed the code. In total, 20 of the 25 companies in the AEX index participate.
Also family businesses such as SHV
In addition, a number of large family businesses are embracing the code, including SHV and Jumbo. VNO-NCW expects that more companies will sign the new tax code in the near future.
The tax routes of multinationals have been under the magnifying glass for a few years now. Last October, 136 countries agreed on stricter rules to combat tax avoidance. For example, there should be a worldwide minimum rate of 15 percent profit tax.
Increase public trust
The Wednesday presented code is intended, among other things, to increase public trust in the business community, said VNO-NCW chairman Ingrid Thijssen: “That trust is essential, because companies play a crucial role as the engine of the economy and in solving the major issues in our economy. society. Transparency about the tax position of companies also helps to increase trust in the tax system.”
According to Thijssen, the multinationals no longer see taxes only as a cost item, but also as an ‘important contribution to the societies that make their existence possible’.
Jan van de Streek, professor of tax law at Leiden University, is positive about this insight: “They are of course right about the fact that taxes contribute to the prosperity and functioning of a government. The fact that the business community is making this so broad is something new.”
Van de Streek calls it “groundbreaking” that companies are going to make public how much tax they pay per country, so-called country by country reporting† Under European rules that will come into effect from 2026, companies only have to report this about their activities within the European Union. “The fact that they will do that from 2023, and then worldwide, is an important shift.†
According to development organization Oxfam Novib, poor countries are 100 billion euros annually because multinationals transfer their profits without paying tax on them first. Under the new tax code, such constructions would come to light immediately.
Also read: Cabinet has taken action, but the Netherlands remains a ‘gateway country’†
‘Signal of transparency’
Arnold Merkies, coordinator of Tax Justice Netherlands, which is committed to fair taxation, is also pleased that companies promise to disclose their payments per country. “It is a signal that large companies want to become more transparent. The question is how it will work out in practice. The code does not specify exactly how companies must disclose this data, as there is no concrete standard. That offers leeway to not bring everything out.”
VNO-NCW recognizes that not all multinationals now meet the standards of the code. In the coming years, the companies involved will therefore indicate in their annual reports where they still fall short.
According to Merkies, the tax code is “a step in the right direction”. But, according to him, tax avoidance by Dutch companies is not simply a thing of the past. He points to the international ranking of tax havens that Tax Justice Network published earlier this week, in which the Netherlands is in twelfth place. “We are doing worse than the Cayman Islands and Cyprus. So there is a world to win.”