WILLEMSTAD, 03/12/05 - The Netherlands and the Netherlands Antilles have reached agreement on an amendment of their bilateral tax treaty. Differences had dragged on for months on amending the BKR regulation, as it is known.

Currently, Dutch companies can transfer profit payouts to their parent company in the Antilles at an 8.3 percent tax rate. This enables them to avoid the much higher tax rate of 25 percent if the money was paid out in the Netherlands.

An EU tax directive has made it possible to reduce the rate to zero percent. For the Antilles, this would be very favourable, because the country could expect more money to be transferred. The Netherlands opposed this, however, for fear of abuses.

Finance State Secretary Wijn and Antilles Minister De Lannooy have now agreed the zero rate will apply to bourse-listed companies, banks, insurance companies and pension funds. "They are under the supervision of the central bank, so it is difficult to do something wrong," De Lannooy explained. For all other companies, a tax rate of 5 percent will apply.

Other companies can however benefit from the zero rate if they invest their dividends in sustainable economic activities. For this purpose, a Recovery Bank will be set up as quickly as possible under the wing of the Antilles central bank to invest in projects.