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Netherlands Should Cut Tax On Low-Paid Workers: IMF

by Ulrika Lomas, Tax-News.com, Brussels

13 December 2016


The Netherlands could improve the efficiency of its tax system by shifting the tax burden away from employment towards consumption and property, the International Monetary Fund (IMF) has said.

In its annual Article IV consultation for the Netherlands, the Fund said that taxes should be reduced for lower paid employees. It welcomed a measure in the 2016 Budget to increase earnings-related tax credits for workers on lower incomes but called for a "more fundamental overhaul" of employment taxes.

The report said that the country should abolish "regressive" aspects of its asset taxation regime and address distortions linked with having multiple VAT rates.

It criticized incentives for debt over equity in the country's tax system and recommended the introduction of an allowance for corporate equity or limiting the deductibility of interest from corporate taxes. The IMF also recommended that the Netherlands phase out the mortgage interest deductibility by at least one percentage point per year.

TAGS: VAT rates | tax | Netherlands | interest | employees | budget | International Monetary Fund (IMF) | tax credits

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