Netherlands To Boost Competitiveness With Corporate Tax Cut

by Ulrika Lomas, Tax-News.com, Brussels

23 September 2004

The Dutch government on Tuesday proposed cutting the country’s corporate tax rate by 4.5% by 2007 in a bid to compete with Eastern Europe and improve Holland’s international competitiveness generally.

Under the proposals presented in the government’s 2005 budget, company income tax will be cut to 31.5% next year from 34.5%, with a further cut to 30% slated to take place by 2007.

This reduction will bring the country’s corporate tax rate below the average rate in the old EU15, which currently stands at 31.4%.

However, the move has likely been made in the knowledge that the average corporate tax rate in the new member states, located mainly in the former Eastern bloc, is 21.5%

"In the battle for investment, corporation tax is becoming more important," the government's budget statement acknowledged.

The corporate tax cut will cost the government €2.5bn ($3bn) and will be offset by the scrapping of tax advantages for certain commercial business vehicles, and a higher energy tax.

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