The Netherlands adds Palau, Panama and Seychelles to blacklist of low-taxed jurisdictions, removes Oman

On 1 January 2021 the Dutch Ministry of Finance updated the Dutch blacklist of low-taxed jurisdictions which is applicable for the year 2021. Compared with previous’ years blacklist, three jurisdictions have been added to the blacklist (i.e. Palau, Panama and Seychelles) and one jurisdiction has been removed (i.e. Oman).
 
Tax implications in the Netherlands
The Netherlands has a blacklist for jurisdictions without a statutory profit tax and jurisdictions with a statutory profit tax rate of less than 9%. The Dutch blacklist also includes non-cooperative jurisdictions identified by the EU. At this stage, the main effects of being on the Dutch blacklist are:

1.  the application of controlled foreign company (CFC) rules effective 1 January 2019 (subject to certain conditions);
2. the non-eligibility for obtaining an advance tax ruling when in a transaction or corporate structure a Dutch blacklisted jurisdiction is involved effective 1 July 2019; and;
3. the application of the withholding tax of 25% on interest and royalty directly or indirectly paid to subsidiaries or permanent establishments effective from 1 January 2021 (for non-Dutch tax treaty jurisdictions). 

In 2021, the Dutch blacklist includes Anguilla, Bahama’s, Bahrain, Barbados, Bermuda, British Virgin Islands, Cayman Islands, Fiji, Guernsey, Guam, Isle of Man, Jersey, Palau, Panama, Samoa, Seychelles, Trinidad and Tobago, Turkmenistan, Turks and Caicos Islands, the United Arab Emirates, the US Virgin Islands, US Samoa and Vanuatu.
 
Inclusion of a jurisdiction on the Dutch blacklist applies for the entire calendar year 2021 with an annual revisit of the list effective the following calendar year.