When is tax planning aggressive?

In tax-linked I provided my view on the question:”When does tax planning become agressive?”. Please find my response to this question below.

When countries can define and agree on a “fair share of taxation” then there would be a consensus about a minimal amount of taxation. Tax planning might become “aggressive” in case the minimum threshold of “fair share of taxation” is not met. Getting to a consensus and to a definition of “aggressive tax planning” is therefore still a long way away…

Currently it seems that there is a public debate on what a fair share of taxation is. There are seemingly proper and improper ways to use tax treaties, hybrid instruments and hybrid structures. Even business models, the way we are doing business, employing staff and so on is put under a magnifying glass. The question arises when is enough taxation enough.
In the discussion about what aggressive tax planning is, the purpose and its consequence is not always taken into account. An investor would like to have a sufficient return of its investment. Taxation lowers the return on investment, which makes the investment less lucrative. The BEPS discussion provides uncertainty about the return on investment and is therefore rather harmful for countries which appreciate investment.

My focus is on genuine businesses, with functions and risks aligned, international start-ups and Dutch entrepreneurs. This client base is marginally negatively affected by the BEPS discussion. Although, the compliance expenses are expected to increase due to the new regulations, these compliance expenses are relatively low in the Netherlands, so an competitive advantage is also likely to become apparent.
Holding companies are still in strong demand, whereby a safe and solid economic environment is more important than the tax aspects of a chosen jurisdiction. The developments regarding the Bilateral Treaty Investment, is more important for these companies than BEPS.”..

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