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Federal Budget: what about the corporate tax reform?

AmCham Belgium welcomes the new government budget for 2017, but regrets that no progress was made on corporate tax reform. In a letter sent to key stakeholders, AmCham Belgium laid out its view on current corporate tax reform proposals. What are its recommendations?

AmCham Belgium recommends not to delay the corporate tax reform at a time when other European countries are adopting lower corporate income tax (CIT) rates and when the notional interest deduction might become an EU-wide policy, thereby reducing Belgium’s leeway to develop an attractive fiscal regime. While lowering the CIT rate to the range of 20-25%, as currently discussed by the Government, would be a step in the right direction, AmCham Belgium strongly favors bringing it down to 20% or even less in order to remain competitive with other countries.

Furthermore, AmCham Belgium is concerned about current talks on introducing a capital gains tax. It is an unnecessary compensatory measure: companies’ value and therefore the capital gains of investors would not inflate after the CIT reform. The international business community is confident that government revenues will be compensated by a broader tax base and other already-approved taxes, such as the tax on fuel cards. Moreover, eliminating or limiting current exemptions of capital gains tax for companies would disserve Belgium’s reputation as a location for holding companies. In many instances, holding activities are combined with headquarters and decision-making centers, which is a significant advantage in the current Brexit context. A capital gains tax would diminish opportunities to attract such activities.

We are in favor of creating a healthy economic ecosystem which combines small and medium-sized enterprises (SMEs) and international companies. SMEs and large companies are interdependent: for many SMES, most of their sales and income come from direct and/or indirect B2B operations with international companies. With this in mind, AmCham Belgium strongly recommends tax measures that incentivize both the development of SMEs and international companies, without putting the latter at a disadvantage. Belgium’s economy depends on international companies. AmCham Belgium looks forward to working with policymakers to ensure that the corporate tax reform reinforces the Belgian economy by attracting foreign investment.