WHAT IS OUR POSITION ?
Reducing both the budget deficit and the tax burden were two goals of the Michel Government. It has only been partially successful in achieving them. The government’s structural budget deficit has been reduced to 1.3% from 2.7% and the tax-to-GDP ratio has fallen to 50.7% from 52.2%. That remains well above the European average of 46%. The next government will need to make additional efforts to reduce government spending further.
The tax burden on businesses has not fallen despite the corporate tax reform. The reform measures were necessary because the EU had called into question the Belgian system of high tax rates coupled with considerable deductions. Reform plans were spread across two legislative periods. It is important that the new cabinet effectively implements the decisions that have been set in motion already within the predetermined timeline.
With a corporate tax rate of 25% as of 2020, Belgium scores average on a European scale. A further reduction to 20% is necessary in order to continue attracting investments and to be prepared for the introduction of the Common Consolidated Corporate Tax Base (CCCTB).
In addition, the digital revolution is creating challenges with regard to a fair allocation of corporate profits in relation to digital activities between countries. Belgium needs to push for a structural solution at an OECD level and avoid the imposition of turnover taxes.
WHAT ARE OUR CONCRETE RECOMMENDATIONS ?
- Further reduce government spending so that the tax burden can be eased.
- Fully implement the recently passed corporation tax reform.
- Implement an additional and general reduction of the corporation tax rate to 20%.
- Ensure the passing of a structural regulation within OECD countries for the taxation of profits from digital activities and, in doing so, prevent turnover taxes being demanded.
- Ensure that tax reform for individuals gets passed in order to make it possible for Belgian companies to be competitive with regard to the pay policy.