INDIA ACKNOWLEDGED that a most-favored-nation clause in its tax treaty with Holland has the effect of reducing withholding taxes on interest, rents and royalties paid to companies in Holland to 10%. In a related development, the Dutch finance ministry announced that it would not let Dutch companies claim credit against Dutch income taxes for the new tax India has imposed since June 1997 on distributed profits. India used to collect a withholding tax at the border on dividends paid to foreign shareholders. This tax was clearly creditable in Holland. India switched in June 1997 to a tax on distributed profits. The new tax is imposed on the Indian company paying the dividend.