Parliamentary Questions raised over OCI’s Tax-Free €5 Billion Shareholder Payouts

The House of Representatives wants an explanation from the Secretary of State Marnix van Rij before 2:45 pm this afternoon about a change to the articles of association that OCI is presenting to the shareholders today.

It is not often that a shareholders’ meeting leads to parliamentary questions. But today the day has come, at OCI, that one special shareholders meeting investing for a change in the articles of association.

OCI wants to return several billion euros to shareholders, as a result sell of OCI’s interest in Fertiglobe (a manufacturer and distributor of nitrogen fertilizers based in the United Arab Emirates) to Adnoc. That raised $3.62 billion. OCI recommends the following construction for this:

As you can see above, the share capital is first increased (by €2.7 billion) and immediately after it is reduced again (by the same amount). This trick should ensure that the fertilizer manufacturer can pay €2.7 billion tax-free to shareholders. It caused the next rope head the NRC: ‘How chemical company OCI pays out billions to its shareholders and leaves the tax authorities empty-handed’.

€5 billion paid out tax-free

This is not the first time that OCI has used this trick: the same thing happened in the previous two years. If shareholders give the green light to change the articles of association this afternoon, OCI will have paid a total of €5 billion tax-free over the past three years. According to NRC, this means that the Dutch tax authorities will lose out on €750 million.

MPs from GroenLinks-PvdA and D66 have now requested an explanation from State Secretary Marnix van Rij of Finance (responsible for tax matters). Before the start of the shareholders’ meeting at 2:45 pm, they want to have an answer to the question ‘if and how it is possible to avoid dividend tax by increasing the capital issued at the beginning and then making tax-free capital gains, and does this have an impact on the existing contracts that the government is making with industrial companies to make the production process more sustainable.’ You can answer the parliamentary questions here find

The government is making separate agreements about greening with industrial companies that distribute a lot, including with OCI. Some companies receive subsidies to take measures to be more sustainable. This makes constructions leading to additional tax avoidance controversial. It is not known if OCI also receives subsidies.