Mauritius was not included on the ‘blacklist’ of 21 jurisdictions published by the Dutch finance ministry in December. It said the list was aimed at preventing companies from avoiding tax by moving mobile assets to low-tax countries and territories. All those listed have either no corporation tax or levy a corporation tax rate that is lower than 9%.
In addition to the five jurisdictions that are currently blacklisted by the EU as non-cooperative – American Samoa, the US Virgin Islands, Guam, Samoa and Trinidad & Tobago – the Netherlands listed a further 16 countries and territories: Anguilla, the Bahamas, Bahrain, Belize, Bermuda, the British Virgin Islands, Guernsey, the Isle of Man, Jersey, the Cayman Islands, Kuwait, Qatar, Saudi Arabia, the Turks & Caicos Islands, Vanuatu and the United Arab Emirates.
The list will be used in relation to three measures to combat tax avoidance. The first is an additional measure on controlled foreign companies (CFCs) announced in the Dutch budget, which came into effect on 1 January 2019. With this measure the government aims to prevent companies avoiding tax by moving mobile assets to low-tax jurisdictions.
Secondly, the list will also be used to implement a conditional withholding tax on interest and royalties. From 1 January 2021, companies registered in blacklisted jurisdictions will be subject to a 20.5% withholding tax on interest and royalties received from the Netherlands. This will prevent funds being channelled to tax havens through the Netherlands.
Thirdly, the Dutch Tax and Customs Administration will no longer issue rulings on transactions with companies headquartered in the listed countries.
The Dutch List will be updated each year, while the EU list is due to be updated in the first quarter of 2019. Going forward, any jurisdictions that are added to the EU list will also be added to the Dutch List and the measures will apply.
Mauritius is rated as a compliant jurisdiction by the Organisation for Economic Co-operation and Development (OECD). The fact that neither the Netherlands nor the EU has chosen to blacklist Mauritius reinforces its position as a jurisdiction of substance and transparency.