The Dutch tax treaty developments are the following. At present the Netherlands is conducting negotiations in order to enter into agreements to avoid double taxation and/or to amend such agreements with Algeria, Australia, Azerbaijan, Brazil, Canada, China, Costa Rica, Cuba, Cyprus, France, Ghana, Germany, Hong Kong, Indonesia, Iran, Isle of Man, Japan, Kenya, Kyrgyzstan, Libya, Malaysia, Mexico, Peru, Saudi Arabia, South Korea, Switzerland, Turkey, Turkmenistan, the United Arab Emirates and the United Kingdom. Furthermore, the Netherlands is conducting negotiations in order to enter into an exchange of information agreement for tax matters with Bermuda, Guernsey and the Cayman Islands.On 20 June 2007 The Netherlands and Jersey affirmed their wish to deepen economic and trade ties when the Dutch Under-Minister of Finance and the Chief Minister of Jersey signed two agreements and a Memorandum of Understanding in The Hague, the Netherlands. The information exchange agreement between the Netherlands and Jersey is based on the OECD?s Model Agreement on the Exchange of Information on Tax Matters. Further to their agreement, the Netherlands and Jersey will exchange bank and other information on request relating to both criminal and civil tax matters. For criminal tax matters information exchange can apply whether the investigation relates to conduct before or after the coming into force of the agreement. For civil tax matters such exchange can apply only in respect of taxable periods beginning on or after the date of entry of the agreement. As well as the information exchange agreement, the Netherlands and Jersey signed an agreement on access to mutual agreement procedures relating to transfer pricing and the application of the Dutch participation exemption. The latter securing the application of the Dutch participation exemption in accordance with the rules as set out in the Dutch corporate income tax law. Subject to certain conditions, the Netherlands participation exemption exempts enterprises from tax on income received from participations of 5% or more. Finally, the Netherlands and Jersey agreed to continue negotiations on further measures needed to alleviate undesired tax barriers and other obstacles of a discriminatory nature that may be included in the domestic tax legislation of the parties with the intention in due course to integrate partial results achieved into a double taxation agreement.The Netherlands and Canada have agreed to conclude a Convention on mutual administrative assistance for the proper application of customs law and the prevention, investigation and combating of customs offences on 14 August 2007. This convention is now pending for approval procedures in both countries before it will enter into force.The Netherlands and The United Arab Emirates have signed a Double Taxation Agreement in Abu Dhabi on 8 May 2007. This tax treaty is now pending for approval procedures in both countries before it will enter into force.The Netherlands and South Africa have signed a new Double Taxation Agreement on 10 October 2005 in Johannesburg. On 22 October 2006 the Dutch Government has approved this tax treaty. As the South African Government has not yet approved the tax treaty the tax treaty could not enter into force as per 1 January 2007. It is not clear when it will enter into force. This new tax treaty is suppose to replace the tax treaty from 1971. A major change in the new tax treaty will be the introduction of a dividend withholding tax exemption for corporate shareholdings of 10% or more. Under the current 1971 tax treaty, a maximum of 5% dividend withholding tax rate applies for shareholdings of 25% or more. For other dividends, the current maximum 15% dividend withholding tax rate will continue to apply. Both interest payments and royalties will be exempt from withholding taxes under the new tax treaty. Interest is currently subject to a 10% maximum, whereas royalties are already exempt under the current treaty. As a result of taking account of the South African ?secondary tax on companies?, it is expressly permitted to apply a higher tax rate to South African permanent establishments than to South African companies. It does not appear to be the intention that the new tax treaty will limit the application of the aforesaid ?secondary tax on companies?, which applies to profit distributions by South African companies. Furthermore, the new tax treaty will include changes with respect to pensions, annuities and social security payments, which may be taxed in both countries under certain circumstances.The Netherlands and Barbados have concluded a Double Taxation Agreement, which will enter into force as per 1 January 2008. With respect to withholding taxes, dividends paid to majority corporate shareholders (at least 10% of the shares) are exempt from dividend withholding tax, while interest payments and royalties are subject to a maximum of 5% withholding tax.The Netherlands and Bahrain have signed on 5 February 2007 an agreement regarding reciprocal exemption with respect to taxes on income and profits derived from international air transport. In November 2000 the Netherlands and Bahrain already discussed the content of the agreement in Bahrain, however it took more than six years before it was eventually signed. The agreement is now pending for approval procedures in both countries before it will enter into force.On 8 June 2007 before the Dutch Supreme Court Advocate General Wattel issued his opinion in a tax sparing credit case. According to Advocate General Wattel a tax sparing credit should not be granted to a Dutch company based on the most-favoured-nation principle. In this case a Spanish holding company was the 100% shareholder of a Dutch company. The Spanish holding company paid a large amount of interest to the Dutch company. The interest payments received by the Dutch company were fully taxable with Dutch corporate income tax. The Dutch company applied for a so-called tax sparing credit on the interest payments received, meaning that the Dutch company would be allowed to use a credit for underlying tax on the Spanish interest payments. This request from the Dutch company was based on the free movement of capital (article 56 EC), the tax treaty between the Netherlands and Brazil and the most-favoured-nation principle. If the Netherlands grants a tax sparing credit on interest paid from Brazil to a Dutch company, the Netherlands should also grant such a tax sparing credit on interest paid from Spain to a Dutch company. Advocate General Wattel however concluded that based on previous case law of the ECJ (the D case) there is no obligation of most-favoured-nation treatment based on EC law. According to Advocate General Wattel a bilateral tax treaty cannot be extended to a party that is not a part to the tax treaty. A tax sparing credit is a part of the entire tax treaty and is in the view of the Advocate General Wattel not a unilateral benefit granted by the Netherlands. Consequently the Dutch company is not allowed to apply the tax sparing credit on the interest payments it received from its Spanish shareholder.On 7 June 2007 Advocate General Mengozzi delivered his opinion in the Dutch Amurta case. This case is about the compatibility of the Dutch dividend withholding tax on outbound dividend with the free movement of capital (article 56 EC). According to the Advocate General Mengozzi the Dutch rule violates the free movement of capital provided by the EC Treaty as it treats non-resident shareholders less favourably than comparable resident shareholders. Dividends paid by a Dutch company to its EU shareholder that holds less than 25% of the shares is subject to Dutch dividend withholding tax whereas dividends paid by a Dutch company to its Dutch shareholder that holds at least 5% of the shares are exempt from Dutch dividend withholding tax. According to the Advocate General Mengozzi this restriction cannot be justified, unless the restrictive effects of the Dutch withholding taxation is completely neutralised under the relevant tax treaty in the shareholder?s resident state. Advocate General Mengozzi indicates that a possible relief based on national tax law should not be taken into account in this respect. The case concerns a Portuguese company which holds 14% of the shares in a Dutch company. The Dutch company has paid a dividend to its Portuguese shareholder. This dividend payment was subject to Dutch dividend withholding tax as the EU Parent/Subsidiary Directive was not applicable. The Portuguese shareholder did not hold at least 25% of the shares in the Dutch company. Accordingly the Dutch company appealed to the Court of Appeal of Amsterdam arguing that the payment of dividend withholding tax formed a discriminatory restriction on the free movement of capital. Dividends paid to a Dutch shareholder that qualifies for the Dutch participation exemption or either to companies that carry on business in the Netherlands through a permanent establishment are exempt from both Dutch dividend tax and corporate income tax. According to Advocate General the Dutch levy of withholding tax on dividends constitutes a restriction on the free movement of capital as it treats non-resident shareholders less favourable than comparable resident shareholders. Accordingly Advocate General Mengozzi concludes that the exemption from dividend withholding tax provided by the Dutch tax law that applies only to dividends paid to Dutch companies or companies that carry on a business in the Netherlands through a permanent establishment, is not compatible with article 56 EC. Furthermore, Advocate General Mengozzi concludes that according to Amurta the dividend received from the Dutch company is exempt from corporation tax in Portugal and any withholding tax paid on the dividend in the Netherlands cannot therefore be credited against Portuguese corporation tax. Even if the withholding tax paid in the Netherlands could be credited in full against Portuguese corporation tax, the credit is granted by Portugal unilaterally. On 8 November 2007 the ECJ took a major decision in the Amurta case. The ECJ has ruled that from now on dividends issued by companies to domestic and foreign minority shareholders in the EU must be treated equally. The ruling has far-reaching consequences for the dividend withholding tax in a large number of EU member states as domestic dividends are usually exempt from tax while tax is imposed on cross-border dividends. Earlier this year, the ruling already resulted in a modification to Dutch tax law. As per 1 January 2007, the dividend withholding exemption is applicable to shareholders established in another EU member state provided they meet the 5% share condition (it does not matter anymore in which EU member state the parent company is established) in order to bring Dutch dividend withholding tax further in line with EU law.