Amsterdam-based non-profit research company SOMO has released a report that claims that the Netherlands is home to companies involved in human rights violations.

The report investigated large multinational companies in the resource industry that have a subsidiary in the Netherlands.

It claims that of the eight companies it investigated, all were involved in human rights violations abroad, including environmental pollution in populated areas, militia violence, displacement and murder.

Government regulation

It also claims that the government is unsuccessful in fully regulating these companies.

The Dutch government’s recently released policy statement on corporate social responsibility (CSR), states that CSR is no longer non-committal, while still emphasising its voluntary nature and the importance of corporate self-regulation. Yet, according to the report, this is an insufficient response as there are no "effective measures" against violations.

Tax avoidance

The companies investigated are not strictly Dutch companies, but are what the report calls “mailbox” companies with only a small operation in the Netherlands that allows them to pay tax here, rather than in the source countries where the tax rates would be higher.

The report goes further, stating that the Netherlands play a crucial role in global tax avoidance. The company calculated that 28 developing countries lose at least 771 million euros annually in tax income on interest and dividend payments only as a result of Dutch tax treaties.

They say the corporate structures of the researched multinationals with important subsidiaries in the Netherlands point to tax avoidance, including that these Dutch financing entities all have ties with other subsidiaries incorporated in tax havens.

G20 agreement

What might affect some change in this situation is the recent agreement among finance ministers from the G20 group of leading nations (which includes the EU but not the Netherlands) to fight international tax avoidance and evasion.

Many multinational firms currently legally avoid tax through loopholes, tax havens or setting up subsidiaries, but the new rules could require them to pay more in the countries where they do business.

The G20 said the laws should change within two years, but that may not be possible, given that hundreds of tax treaties, such as the Netherlands uses, exist between countries.

Call for action

The report argues that corporations that are found to violate human rights abroad should not enjoy Dutch fiscal and investment benefits.

They also call for stricter transparency and reporting obligations to be imposed on companies incorporated in the Netherlands and the implementation of effective accountability mechanisms.

Sources: SOMO, BBC