The Netherlands, a tax haven for the tobacco industry

According to an investigation published in early November 2020 by The Investigative Desk, the four main players in the tobacco industry channel around 40 billion of their profits through the Netherlands in order to benefit from more advantageous taxation.

On November 4, 2020, the collective of journalists The Investigative Desk published an investigative report dedicated to the tax evasion practices used by the four "giants" of the tobacco industry: British American Tobacco (BAT), Imperial Brands (IB), Japan Tobacco International (JTI) and Philip Morris International (PMI) [1].

This investigation reveals in particular that more than 40 % of the 17.5 billion euros of cumulative annual net profits of these companies pass through Dutch holding companies, or around 7.5 billion euros each year [2However, the Netherlands offers these companies more advantageous taxation than in the countries where these revenues were recorded.

Profits flowing through holding companies with no real activity

The Dutch daily NRC Handelsblad, which reported on the investigation, also states that "Most of the holding companies in question have neither employees nor activities. They only serve as transit ports for revenues."3].

The International Consortium of Investigative Journalists (ICIJ) had already demonstrated, in the context of the revelations of November 2017 known as the "Paradise Papers", that the Netherlands was one of the main tax havens in the world. Following these revelations, Lison Rehbinder, spokesperson for the NGO CCFD - Terre solidaire, declared at the end of 2017 that by offering "very low tax rates on certain activities", the Netherlands was encouraging "the reception on its territory of companies that do not necessarily have real activity there but which avoid paying tax in other countries where they have real activity" [4].

Procedures that deprive other countries of significant tax revenues

Such practices deprive many countries of tax revenues that would be very useful to them, particularly developing countries. In April 2019, the NGO Tax Justice Network published a report on the BAT's tax optimization processes and their financial consequences in the following six countries: Bangladesh, Brazil, Guyana, Indonesia, Kenya and Trinidad and Tobago [5]. The NGO estimated that these countries would lose 625 million euros in tax revenue by 2030 due to BAT practices. For Alex Cobham, CEO of the Tax Justice Network, "Tobacco retailers are thus depriving low-income countries of funds that could be used to finance their health systems."6].

If the Netherlands, ranked 3rd in the ranking of the "worst tax havens" - behind Bermuda and the Cayman Islands - by the NGO Oxfam in 2016 [7], are particularly singled out in The Investigative Desk's report of November 4, 2020, which mentions other European countries involved in the tobacco industry's tax evasion schemes: Belgium, Ireland, Luxembourg, the United Kingdom and Switzerland [8].

©Generation Without Tobacco

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[1] Manon Dillen, Stefan Vermeulen, Big Tobacco, Small Tax Bill, investigativedeck.com (accessed November 9, 2020). [2] Figure of the day. In the Netherlands, massive tax evasion by tobacco giants, Courrier international (October 30, 2020, consulted on November 9, 2020). [3] Ibid. [4] Cellule Investigation Radio France, ICIJ, Süddeutsche Zeitung, "Paradise Papers": The Netherlands, a tax haven in the heart of Europe, Franceinfo (November 7, 2017, consulted November 9, 2020). [5] Figure of the day: One of the largest tobacco producers is evading developing country taxes, Courrier international (April 30, 2019, consulted on November 9, 2020). [6] Ibid. [7] Four EU countries among world's worst corporate tax havens, new report reveals, oxfam.org (December 12, 2016, accessed November 9, 2020). [8] Manon Dillen, Stefan Vermeulen, Big Tobacco, Small Tax Bill, investigativedeck.com (accessed November 9, 2020). DNF - For a Zero Tobacco World |