CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. OECD Praises Luxembourg's Tax Regime

OECD Praises Luxembourg's Tax Regime

by Ulrika Lomas,, Brussels

24 July 2017

The OECD has praised Luxembourg's tax regime for its predictability, although it sounded a warning about the volatility of tax revenues from the financial sector.

In its latest assessment of the Luxembourg economy, the OECD said that Luxembourg's strong economic performance was due partly to "business-friendly regulations, a predictable tax system, and sound fiscal policies."

It observed that budget surpluses are allowing the Government to reduce corporate income tax, and to introduce new tax credits for investors and low-income earners.

Under legislation approved last year, the corporate tax fell from 21 percent to 19 percent in 2017, and will decrease to 18 percent in 2018.

In addition, the report said that Luxembourg is "one of the most egalitarian countries of the OECD" thanks to the redistributive tax and transfer system.

However, the OECD noted that a high dependence on the financial sector posed risks, particularly with regards to the stability of tax revenues.

"The share of fiscal revenues from the financial sector has declined markedly since the financial crisis, possibly reflecting carried forward losses by banks, and [a] negative [economic] shock would lower the fiscal revenues further," the report said.

In other areas of the tax system, the report recommended adjustments to the tax and benefit system to increase incentives to work for low-skilled younger workers, older workers, and second earners.

The OECD also advised the country to increase excise duties and taxes on transport fuel, which are lower than in neighboring countries and which contribute to high traffic volumes and pollution.

TAGS: tax | business | budget | corporation tax | Luxembourg | tax credits | legislation | regulation

To see today's news, click here.


Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »

Stay Updated

Please enter your email address to join the mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.

To manage your mailing list preferences, please click here »