The Belgian Government's latest proposal to tax multinational corporations is expected to generate €2.1 billion over the next three years, L'Echo reports. The tax plan follows a recent EU directive, announced in December of last year.
Based on an agreement between the OECD and G20, EU27 Member States should apply a minimum tax of 15% on companies whose turnover exceeds €750 million. This should, in essence, prevent multinationals from transferring profits to tax havens. If the tax rate is below 15%, governments will have to apply another top-up tax on the corporation's parent company.
Belgium's Finance Ministry has proposed to apply this directive by 31 December 2023 as part of their tax reform which seeks to shift the burden placed "on work to wealth and consumption," according to Belgium's Finance Minister Vincent Van Petteghem.
Government figures indicate that the Belgian State would earn €634 million in 2024, €714 million in 2025 and €748 million in 2026, an increase massively helped by the government's additional plan to introduce a tax on all multinationals' Belgian subsidiaries.
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This latest measure was a "bombshell" revelation for tax lawyer Denis-Emmanuel Philippe, who told L'Echo that the European directive allows Member States to apply this rule but that it was by no means necessary and "was not on (the government's) table two months ago."
This would result in the Belgian State being able to tax a larger number of companies operating in the country. Philippe believes that the subsidiary tax rate could go from 4% to 11% under the new rule.
However, the proposed measures will contribute to creditors' growing concerns about Belgium's attractiveness as a market for foreign investment. Earlier this month, Fitch Ratings had lowered the country's credit rating from "stable" to "negative" over what they perceived to be a lack of willingness on the Belgian Government's behalf to rein in their ballooning budget deficit.