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A Dirty Dutch Treat!!!

By sleepin'dawg ·
The Sovereign Society's financial news letter published this today. It would be interesting to hear comments.

Wednesday, February 22, 2006 - Vol. 8 No. 38
In Today's Letter:
Comment: Dirty Dutch Treat.

Dear A-Letter Reader:

There is no better example of the dishonest manner in which the world's tax collectors seek to smear and discredit all offshore financial activity than a recent study commissioned by the Dutch Finance Ministry. The report is not only a mishmash of anti-capitalist leftist propaganda against offshore tax havens, it blithely assumes what is now leftist dogma -- that legal tax avoidance is to be equated with illegal tax evasion and criminal money laundering. Try to minimize your personal or business taxes within the letter of the law and suddenly you become a suspected tax criminal!

A major theme of the anti-offshore smear is alleged "money laundering," an all-purpose crime prosecutors twist to fit any criminal indictment. Both the US IRS and the United Kingdom's Inland Revenue consistently distort legal tax avoidance and money laundering. Example: John Healey, a UK Treasury official says: "Tax avoidance and the industry that drives it are increasingly an international phenomenon, and it is vital that we have effective international co-operation to tackle it, as we do for tackling terrorism, organized crime, money laundering and fraud." I heard a high US Justice Dept. official say he and his colleagues assume that any offshore financial activity is probably criminal! If these dissemblers have their way legitimate tax avoidance will be understood as being the same as smuggling cocaine and blowing up innocent people.

Which is why the Dutch report is so odd in its content and conclusions. The report's bottom line: The Netherlands is a tax haven and that makes it vulnerable to money laundering. The report estimates dirty cash laundered in the Netherlands is $22 billion annually, about 5% of Dutch GDP. (Passing strange that the Finance Ministry would attack tax laws that bring in so much foreign investment and taxes).

This distorted thinking assumes that any nation that has low or no taxes automatically allows and is engaged in money laundering. In fact, tax havens worldwide now have tougher anti-money laundering laws than the US or the UK. But low taxes do attract money and business to places such as Panama, the Channel Islands and -- yes -- the Netherlands. (If volume of offshore business measured in dollars is the rule, then the US and the UK are the leading money launders in the world -- as indeed they are).

For major multinational corporations the Netherlands has been a tax haven for decades because of its extensive network of tax treaties worldwide. Those with business operations in more than one country take advantage of these available tax treaties, a process tax lawyers call the "stepping stone" principal. (The IRS derisively calls it "treaty shopping.") Stepping-stone transactions are most useful when passive interest or royalty income is involved, although other commercial and service businesses can also use this system.

It works like this: a German investor wants to earn the highest interest rates available. His tax advisor suggests investing through a Dutch company, because of the Dutch ready-made tax treaty network. The German could form his own Dutch corporation, but Dutch tax authorities prefer he use an independent, pre-existing business. In effect, the German will invest money in an existing Dutch company that will re-invest it elsewhere. The Dutch company charges fees for its middleman role, payments known as "the spread," and this is where the Netherlands GDP makes billions every year.

The tax treaty network allows a Dutch company to invest money virtually anywhere. Under treaty terms, the interest it receives is not subject to withholding taxes in the countries where the money is invested. For example, the US-Netherlands treaty provides for no withholding of tax by the US on interest paid from the US to a Dutch company. The Netherlands company is not required to withhold taxes when that interest in turn is paid to the German investor. No taxes all around. And it's all legal.

The Dutch Finance Ministry report notes that "international and supranational organizations, such as the OECD and the EU, reproach the Netherlands for being a de facto tax haven for non-residents," charging it with engaging in "harmful tax practices." According to the study, "the United States even compares it with Bermuda and the Cayman Islands." Wow!

Let's face it, dear readers. The tax collectors in the high tax socialist welfare states won't rest until all global tax competition is destroyed, to be replaced with uniform high tax confiscation everywhere. Thanks to national sovereignty, this is not about to happen. Unlike the Dutch bureaucrats who authored this report, most tax haven nations are not suicidal.

That's the way that it looks from here,

PS: If you want to know more about legal offshore tax savings, click here.

Money laundering in the Netherlands. LINK:

Dawg ]:)

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Tax avoidance

by Jessie In reply to A Dirty Dutch Treat!!!

I must be a criminal... not that I have any offshore accounts... but trust me, I avoid as many taxes as possible... I've got 4 kids and I claim each and every one of them on my income tax return... and I claim my 10% for charitable donations... and I itemize my medical expense deductions... I tell ya, I'm just a BAAAAAD girl trying to work outside the system!

If they want people to stop "avoiding" taxes, then change the laws that make it easy for people to "hide" their money in offshore accounts... but please, don't criminalize something that's utilizing a perfectly legal loophole... it may be unethical... but that doesn't make it illegal... and who's to say it's all unethical even...

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That's why

by rob mekel In reply to A Dirty Dutch Treat!!!

we say: Our government is trying to be holier then the Pope.

What the report actually is trying to do is persuade member of parliament to determent money to the Dutch-IRS to be able to catch the money-launders. But then there always the ones that ain't money-launders but just legal-tax-avoiders. Such as we all, at least I think, are trying to do.
I for sure don't like to pay more tax then I should
(although if I have to pay a lot of tax, with in the system now, it means I have a large income there for I should be doing well. )


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Its interesting to note

by Dumphrey In reply to That's why

that when ever money laundering comes up, people conveniently forget to mention the Vatican Bank, the last bank on earth that is answerable to no Governmental body, and can not be forced to give client information to authorities. There have been many attempts, and the few success represent the Vatican throwing crumbs to ducks, not capitulation to demands.

a quick google will bring up more.

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