20 September 2005
In 2006 a major improvement is made in the tax climate for enterprises. The tariffs in the corporate income tax will be further cut and capital duty will be abolished.
An additional cut in corporate income tax will be made in 2006, lowering the rate to 29.6%. For SMEs, the starting rate (levied on the first € 22,689 of profit) will be cut to 25.5%. This reduction is being made in addition to a series of cuts, launched at the start of this year. The extra cut of 0.9 percentage points will bring corporate income tax down to 29.6% in 2006 and 29.1% in the following year. The rate applicable to SME’s will drop to 25.5% in 2006 and to 24.5% in 2007.
Capital duty, the tax levied on share issues, will disappear as of 1 January 2006. It was increasingly forming an obstacle to companies in the Netherlands wishing to develop or expand activities by raising equity capital or wishing to strengthen their capital structure. Many neighbouring countries have already abolished this tax.
These measures will make the Netherlands more competitive in the European Union. The new tax structure will further encourage businesses to expand profitable activities.
This package of measures will result in a net reduction in the tax burden on business of € 275 million. The tax cuts will cost the Treasury € 375 million, on top of € 200 million due to the abolition of capital duty. Other tax measures will lead to a tax revenue of € 300 million. The deduction for ‘mixed expenses’ (for lunches etc.) will be reduced for businesses subject to corporate income tax. Similar restrictions have already been introduced for businesses subject to income tax. Companies will no longer be able to deduct write-down losses. Only a small number of companies actually do so at the moment.
A number of other beneficial tax measures for business are being proposed: