Assignment 5.2 PPP Rico
Tax-evasion is illegally evading taxes by e.g. false tax reports, declaring less income, profits, etc. With
other words ‘misrepresenting the true state of affairs’ (Wikipedia, 2017) (Investopedia, sd) The Dutch tax
authority defines tax-evasion as ‘those who file, a by the tax law official, incorrect or incomplete
declaration, where the individual does not pay enough taxes. Will be fined with a category five fine or
sentenced to a maximum of 6 years.’ (Wetboek-online, 2015)
The concept still remains the same but in Wikipedia it is more simplified and in the law-book it is written
in a very formal language. What IKEA does is not tax-evasion but is known as tax-avoidance. Tax-
avoidance is legitimately minimizing the amount of taxes by e.g. operating under a Stichting. (Murray,
2017)
In the Netherlands, there are almost 16.000 financial holdings which are established for tax purposes.
(PanamaPapers, sd) With the publication of the panama papers in 2016, the world found out that there
are many companies who have an IKEA like strategy. American multinationals moved 700 billion dollars
to the Netherlands and a few other countries, this to avoid paying high tax rates. (Bremmer, 2016)
To give another example; an American pension fund wanted to give a loan to a Mexican company, but in
Mexico they had to pay 30% taxes. Because the Netherlands got a tax-treaty with Mexico they only had
to pay 10% taxes when they are processing the money through the Netherlands. (PanamaPapers, sd)
Companies like PepsiCo and the pharmaceutical company Pfizer, do have a lot of the so called ‘letter-box
