Belgium told to raise VAT by IMF
- 23 March 2015 | Richard Asquith
The International Monetary Fund (IMF) has recommended that Belgium consider rises in its VAT rates to help fund labor tax cuts to improve global competitiveness.
Belgium has already scheduled a cut in the social security levies from 33% to 25% through cuts elsewhere. But the IMF has suggested that a rise in the reduced VAT rate from the current 6% and 12% (on restaurants) or removal of exemptions. It noted that Belgium has not raised its standard VAT rate of 21% since 1996. This contrasts with its neighbors – France, Netherlands, Germany and Luxembourg – who have all increased their rates. Belgium’s standard rate is now below the average EU VAT rate of almost 22%.
Belgian deficit growing forcing VAT rethink
Belgium was recently compelled to withdraw its ‘Fairness Tax’, a charge on distributed reserves by foreign companies, by the European Commission. This was because the tax was only levied on non-resident companies. This has left a further deficit in the annual budget and may encourage a review of Belgian VAT.