Belgian PM Pledges To Reduce Taxation Of Income

by Ulrika Lomas, Tax-News.com, Brussels

15 June 2005

Belgian Prime Minister Guy Verhofstadt is currently working on a "crisis plan" aimed at shifting the tax burden away from workers' income and onto consumption in a bid to increase the attractiveness of Belgium internationally.

According to national media reports, the plan centres on proposals to increase the rates of value added tax, known in Belgium as BTW, on certain sectors as a trade off to reduced taxation on incomes. BTW is currently levied at a rate of 21%.

However, labour intensive industries such as construction, hotels and catering will be exempt from the higher tax rates. Instead, the increased rates will be applied on imported goods originating from countries with low labour costs.

It is also reported the the government has allocated EUR200 million in an attempt to bring labour costs closer to those seen in neighbouring countries such as Germany.

The government is due to launch a media campaign in the autumn to promote Belgium to foreign investors.

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