12 October 2005
The State Secretary for Finance, Joop Wijn, has unveiled plans to make the Netherlands more competitive. Owners of small and medium-sized enterprises subject to income tax will enjoy an exemption of at least 5% of their profits. The starting rate of corporation tax will be lowered to 20% (levied on the first €41,000 of profit), compared with the current 27% (on the first €22,689).
The Netherlands advocates a minimum rate of 20% throughout the European Union. The general rate of corporation tax will be reduced from 31.5% to 26.9%. Consideration is being given to introducing a separate rate – probably 10% – for intercompany interest income. Finally, capital duty, a levy of 0.55% on the issue of share capital, is to be abolished.
These are the key points in a document that Wijn submitted to parliament. Once parliament has debated the plans, legislation will be drafted, which is scheduled to come into force on 1 January 2007.
The key objective of the plans to revamp the corporation tax is to keep more businesses in the Netherlands and attract new business. “If the Netherlands can consistently earn a place on investors’ shortlists,” writes Wijn in the foreword to the policy document, “this can only be good for the growth potential of our economy”.