Growth-Enhancing Corporate Tax Reform in Belgium

Ruud de Mooij, Shafik Hebous and Hrdinkova Milena
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Hrdinkova Milena: Ministry of Finance in the Czech Republic, Prague, Czech Republic

Nordic Tax Journal, 2018, vol. 2018, issue 1, 1-17

Abstract: Until 2018, Belgium had a unique corporate income tax system due to its notional interest deduction, also known in public finance literature as the allowance for corporate equity. At the same time, it had one of the highest corporate tax rates in Europe at 34 percent. The latter came under severe pressure to reform and, as of 2018, the government has started to reduce the rate, gradually to reach 25 percent in 2020. The reduction is accompanied by other measures, including a limitation of the notional interest deduction. This paper argues that the lower CIT rate is likely to be conducive to economic growth. Yet, the effects on growth would have been more favorable if the notional interest deduction would have been strengthened, rather than diminished.

JEL-codes: H25 H32 H71 (search for similar items in EconPapers)
Date: 2018
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:vrs:notajo:v:2018:y:2018:i:1:p:1-17:n:4

DOI: 10.1515/ntaxj-2018-0004

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