Agreement with the Isle of Man, speech secretary of state of the Ministry of Finance Joop Wijn, October 12, 2005.
Your Excellency, ladies and gentleman,
Today, the Netherlands and the Isle of Man will affirm their wish to deepen their economic and trade ties.
Because of the globalisation of the economy, taxpayers are generating more of their income abroad or transferring more of it across borders. That is why international exchange of information is so important for accurate tax assessment. Foreign assistance is also essential to combat tax avoidance, fraud, money laundering and terrorist financing. All countries, of course, want to pursue competitive tax policies. And there’s nothing wrong with that as long as the policies are transparent. Most people are beginning to realise that banking secrecy and other obstacles to the exchange of information are not legitimate forms of competition. How can this growing awareness be put into action? The Netherlands and the Isle of Man have found an answer.
The Netherlands is aware that the global playing field for the exchange of information is still not level. To create a level playing field, some countries will have to take the initiative. This will be easier if they can agree a broad package of positive measures, one that covers more than just the exchange of information. By offering the Isle of Man such a broad package, the Netherlands has taken the first step towards a new relationship. We both hope this example will boost the OECD process regarding the exchange of information. Not enough progress is currently being made in this area. Every country that follows our example will bring the level playing field a step closer. That will also highlight how unjust it is that some countries are still trying to profit for as long as they can from outdated and, in effect, unfair systems of banking secrecy.
The Netherlands would like to thank the Isle of Man for working with the OECD and contributing to the debate on the exchange of information and the prevention of harmful tax competition. The Isle of Man has clearly established itself as an advocate of transparency and the effective exchange of information. The information exchange agreement between the Netherlands and the Isle of Man, for example, is based on the OECD Model Agreement on Exchange of Information on Tax Matters. The Isle of Man played no small part in drafting that model agreement.
The Netherlands is also negotiating tax information exchange agreements (TIEAs) with other participating partners. Some of the talks are already at an advanced stage. The Isle of Man, too, has entered into negotiations with other OECD countries. In November the participating partners and the OECD will meet in Melbourne to discuss how they can move ahead as quickly as possible with TIEAs and the level playing field. Today, we are showing that we can make progress one step at a time if countries are willing to work for mutual benefits. The participating partners must give up the reassuring comforts of privacy, banking secrecy and isolation. And OECD countries must take a critical look at their old familiar assumptions. They must take a more realistic approach to low-tax jurisdictions. This will not always be easy but we, the Netherlands and the Isle of Man, believe we are on the right course.
The Isle of Man and the Netherlands are both located in Europe. Everyone in Europe, from the largest to the smallest jurisdictions, can benefit from productive cooperation. With this in mind, I hope Europe makes the fastest progress towards a level playing field.
As well as the TIEA, the Netherlands and the Isle of Man will sign an aviation and shipping agreement, an agreement on access to mutual agreement procedures and an agreement on the application of the Dutch participation exemption. The competent authorities in the two jurisdictions can consult directly with each other as soon as the agreement enters into force. This form of mutual recognition is an important basis for further progress together.
As well as the agreements, we have drawn up a Political Declaration that specifically refers to our intention to deepen our tax relations. The ultimate goal is to negotiate a treaty for the avoidance of double taxation. The negotiations will take account of the special features of the two tax systems. Where appropriate, further progress can also be made step by step so that we can enjoy the first benefits as quickly as possible.
I believe the agreements we will sign today will help widen the trading ties between the Netherlands and the Isle of Man and benefit both partners.
Thank you.