Proposition 54K2920

Projet de loi modifiant le Code des impôts sur les revenus 1992 supprimant la pénalité en cas de non-conformité à la condition du montant de rémunération de dirigeant.

General information ¶

Authors

CD&V Griet Smaers
Ecolo Georges Gilkinet
Groen Meyrem Almaci
LE Benoît Dispa
MR David Clarinval, Benoît Piedboeuf
N-VA Steven Vandeput
Open Vld Luk Van Biesen
PS | SP Stéphane Crusnière, Frédéric Daerden, Ahmed Laaouej

Submission date

Jan. 31, 2018

Official page

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Status

Adopted

Requirement

Simple

Subjects

tax law small and medium-sized enterprises pay managing director corporation tax

Voting ¶

Voted to adopt

Groen CD&V Ecolo LE PS | SP DéFI ∉ Open Vld N-VA MR PVDA | PTB PP VB

Abstained from voting

Vooruit

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Discussion ¶

April 4, 2019 | Plenary session (Chamber of representatives)

Full source

Mr Piedboeuf and Dispa, rapporteurs, refer to the written report.

Mr. Speaker, for four years, the government has profoundly reformed our economy and the corporate tax reform is obviously one of those important reforms. In particular, it was focused on SMEs, with a reduction of the tax rate to 20% up to the first 100 000 euros. It is largely funded by large companies because it needed a balance to avoid a significant budgetary impact.

At first, the government had decided not to raise the penalty to 10 percent. Here, it is completely removed, including the one that was planned at 5%. This is good news for leaders and SMEs.

We were also committed to conducting an assessment of this ISOC reform to know its impact on the economy in general, on investments and on employment. This assessment will need to be made because it conditioned the abolition of this penalty.

Our group joined the proposal voted. It is never too late to fix a line and we did it together. I would like to thank the colleagues who brought this beginning of correction. We will support this proposal.

Mr. Speaker, I will not return to the controversial aspects that have, at some times, been very present in the debates on the corporate tax reform. We were surprised – but also some in the majority – of this double punishment imposed on SMEs that do not allocate sufficient remuneration (45 000 euros) to at least one of their executives. If they do not allocate a remuneration of at least €45,000 in charge of the taxable income, not only are they not subject to the reduced rate – which is already a 5% tax surplus – but they were also subject to a 5% penalty. It did a little a lot.

This proposal, which was actually budgetary and aimed at financing the cost of reducing the rate, was very poorly received by SMEs and their representatives, the Union of the Middle Class in particular.

Within the committee, some have shown themselves open to correction quite quickly. This is what we managed to do.

I would like to thank all the colleagues who agreed to continue the debate. I also want to thank Minister De Croo, who understood the importance of changing the position of the government, as well as the chairman of our commission, who made possible a debate that was not easy because an agreement had been reached within the government and within the former majority. It was necessary to break this agreement, which is never easy, but the result is there.

The SMEs thank us because they understand the collective effort, although it must be acknowledged that it is at the initiative of the PS Group. It is also necessary to give justice to the truth of facts.

Many small and medium-sized enterprises still suffer from a cash problem today. They are not always able to allocate a salary of 45,000 euros.

They now understand that we are attentive to their situation, that the legislator is not there to put sticks in the wheels of the economic development of these companies that make up more than 67% of the employment in Belgium.

That is why I am delighted that this bill has been able to gain a broad assent within our committee, as it will probably be the case in our assembly.

Mr. Laaouej briefly outlined how this proposal came to fruition after several discussions. When the measure was introduced by the government in the implementation of the reduced corporate tax rates, there was a fear that small enterprises, now self-employed, would transform into companies or “corporate societies”, as it is called in the literature. In order to prevent the resulting reduction of tax revenues, a system was developed by which a company which does not pay the minimum wage of 45 000 euros to its executive is subject to a double tax increase. After all, this company can no longer benefit from the reduced rate — that measure already existed — but it is also fined in the amount of initially 10 %, then 5 %.

From the outset we opposed it, but since it was a comprehensive agreement, we approved it in the plenary session. However, we have attached a clear condition to this, in particular that we should monitor the evolution of the income from corporate tax. However, we have found that the corporate tax, at least its grade measurement through company advance payments, has never been as high as in previous years. This means that more profits are generated. After all, even with a reduced rate, you still get increased advance payments. The state receives more or at least the same amount of tax money as in the past.

The aforementioned measure was a compensatory measure that would be evaluated after a year, but we did not wait for the official evaluation of the FOD Finance. Based on the figures of company advance payments, we conclude that this bad, punitive measure could be better removed. In this sense, a bill of the PS has been used as a capstone. That bill was co-signed by all political parties, except the Flemish socialists, who apparently disagree with it. However, that is their responsibility.

We have advocated for this measure. We already managed to reduce the fine from 10 % to 5 % last year. Today we are reducing that 5 % to 0 %, so that it can be removed from the code. We will go a step further and make this measure retroactive from 1 January 2018. This means that in the current corporate tax declarations, the so-called Biztax, the programmes will have to be adjusted because in those programs a fine for insufficient payments to business managers was already taken into account.

I think that by this, at the end of this legislature, we will cut off one of our worst measures. I would like to thank all colleagues for their support to our plea for removing this fine.

Mr. Speaker, our group will support this bill.

During the discussion, one and a half years ago, we felt in the committee that linking the amount of the salary of the executive to the reduced corporate rates would cause problems. It is also unfair to impose fines on SMEs by leaving the amount of EUR 45 000 in the law.

Eventually, we found a two-stage arrangement. I think the correction is necessary. In the long run, this penalty rate will disappear. The budget cost is difficult to estimate, but some talk about 20 to 25 million euros.

I was talking about the bicycle tax. The corporate tax in Belgium amounts to 15 billion euros. Last year’s corporate tax reform cost approximately €5 billion.

We have taken a number of measures, including in connection with notional interest, but we currently absolutely do not know what difference they will make. It can make a difference of hundreds of millions, depending on the evolution of interest.

Everything must be seen in perspective. This measure is a fair measure towards SMEs, where there would indeed be a danger of “collectivization”. I think Mr. Van Biesen has said that too. We should not punish SMEs for a number of things, such as the corporate rates that were reduced for them. In my opinion, a good arrangement has now been found for this, and in it the PS group leader, Mr. Laaouej, has a large share. He realized that the original proposal needed to be amended, so we didn’t want to come to a arrangement that would be very detrimental to everyone.

We will approve this proposal. Sometimes a government can make mistakes and the Parliament can correct them, but then it should not be blamed on the Parliament for making corrections to measures that are highly unfair, including for SMEs, using the budgetary argument. The government reduced corporate tax by almost 5 billion a year ago and the global corporate tax revenue is 15 billion. Both here and in the media, we declare that we take this measure, which is a measure of fairness towards small and medium-sized enterprises, for budgetary reasons, that is, we do not take Parliament seriously.

We are responsible and strive to take measures that are consistent and fair and that have a budgetary cost, but in comparison with the budgetary cost of other measures it is not exaggerated. If one has a budget deficit of 11 billion in 2021, this measure represents less than 0.3 % of what the budget deficit would be in a few years. So let us look at everything from the right perspective.

Mr. President, as Mr. Van Rompuy says, we must look at everything in perspective. If we look at the corporate tax reform, this was a very important, essential and necessary measure.

Sometimes we talk about the cost of the corporate tax reform with the reduction of the rates, but it makes little sense to talk exclusively about that cost if one does not take into account the cost of doing nothing. Nothing to do with the historical situation of our corporate tax would have brought us a much higher cost, simply due to the lack of competitiveness, the withdrawal of our companies and the lack of new startups. Therefore, we have taken a very important measure. If one sees what the reforms were in the neighboring countries and the rest of Europe with regard to corporate tax, then the cost of doing nothing would have been innumerable times higher for the country. Hence the need to reform the corporate tax and reduce the rates.

A number of compensations were provided, including the aforementioned notional interest deduction. This component, this double sanction for SMEs who do not comply with the 45 000 euro rule, was also a form of compensation that provided for the demand of those who fear an excessive budget gap. I think we have overshooted that. A double penalty is just too much. This is not a good thing, because this creates legal uncertainty. You know what happens: a SME or self-employed gets control, some expenses are rejected, the taxable profit increases and one no longer complies with the rule. Immediately one is then excessively and disproportionately sanctioned. Hence this recovery measure. I am very pleased that this initiative has been taken. We fully support this, that is the evidence itself.

I know that some people are afraid of further "association", but that seems to me a somewhat exaggerated fear. On the one hand, today there is a reduced rate of 20% on the corporate tax, plus a 30% mobile advance tax. In contrast, there is 50% personal tax plus another RSZ. This is quite a difference, if you put the two against each other. The solution then, of course, lies not in increasing the burden, but in reducing it. Therefore, we advocate that in the next legislature a reform of the personal tax should be made a priority work. It is too high and punished work. If we prioritize this work, we can thus curb the further “corporate-making”, prioritising by reducing burdens rather than increasing them.

Mr. Speaker, as other colleagues have already said, this text, which I hope we will approve today, refers to part of the debate we had during the discussions on the corporate tax reform.

My Ecolo-Groen group had supported the principle of reducing corporate tax while simplifying and removing certain tax niches that do not benefit SMEs and self-employed. We were in favour of a reduction of the rate for SMEs and self-employed individuals in particular, because we believe that it is necessary to encourage those entrepreneurs and entrepreneurs who account for more than 67% of the employment in Belgium, but above all who create employment that is anchored in us, anchored in our regions, unlike other groups that sometimes rush out of our country leaving whole families on the square. This is rarely the case for SMEs. We therefore pay special attention to them.

At the time when the conditions for access to this reduced rate for SMEs were presented, we had directly expressed the greatest reservations. We had also requested with other colleagues the hearing of the Union of the Middle Class to get their opinion on the issue. This penalty of 5%, coupled with the increase of the minimum wage for the executive to have access to this reduced rate, seemed to us quite unfair. We were therefore, from the beginning, opposed to this increase in the barrier to access this reduced rate and also to the penalty that was coupled with it.

This is a very interesting exercise and I thank the colleagues of the Socialist Group for depositing a bill to remedy this injustice, as we have also done. As for the 5% penalty, I think it is simply a matter of justice to this specific sector of SMEs and self-employed workers that we want to encourage. It is with enthusiasm that we will obviously support this text, also co-signed by my colleagues, Meyrem Almaci and Georges Gilkinet.

We also want to return to the minimum salary of the leader that was in place before the reform, i.e. €36,000. We have submitted a bill in this direction and I hope that we can also move forward in this matter, probably in the next legislature. This is an important element for us; but we already support this first step that has been taken.

I thank all the colleagues who supported this text, especially those and those of the majority who, at first, had introduced this penalty and who, today, return to this unjust measure. We must also be able to emphasize this.

Mr. Speaker, dear colleagues, the PTB will support this proposal that aims to remedy a sanction that the government, then majority, had imposed on SMEs and which, by the way, is quite revealing of liberal policy in general. His speech is still very favourable to SMEs, but the measures taken are mostly very beneficial for multinational companies. In this regard, the corporate tax reform is exemplary. First, this measure constituted a double penalty imposed on SMEs, since those sanctioned would pay a higher nominal rate than the one paid by a multinational company. And I am only talking about the nominal rate, since the actual rate targeting large companies is often close to zero, while it is currently 25 % for SMEs.

Mr Van Hees, Mr Piedboeuf wishes to interrupt you.

Many things can be said, but not anything. As I said at the moment, this corporate tax reform in favour of SMEs is supported at a rate of 72% by large companies, in particular as part of the notional interest reform, the implementation of the Anti Tax Avoidance Directive (ATAD) and the introduction of a profit tax of more than 1 million euros.

You can tell what you want, but not anything. Mr. Van Hees, please read the texts of the committee debates!

Mr. President, Mr. Piedboeuf might have had to wait before intervening: I was just going to disassemble all the arguments he just advanced.

The notional interests were indeed modified through the corporate tax reform, but – due to the fall in rates – they no longer represented anything. The minimum tax on profits above 1 million euros is a joke, as the main niches of corporate tax are ⁇ ined – such as the exemption of surplus value and permanently taxed income. As a result, multinational companies will continue to pay zero euros of tax on hundreds of millions or even billions of profits.

If we analyze the benefits of this corporate tax reform for SMEs and multinational companies, we can clearly see that it is the latter who are the winners. Indeed, this disposition was supposed to be presented in two parts, serving as two plates of a balance. On the one hand, the nominal tax rate was reduced; on the other hand, the tax niches were removed.

Tax niches have not been removed, except for a few marginal niches. On the other hand, rates have been reduced.

Who has benefited from the reduction of these rates? For SMEs, the rate increased from 25 % to 20 %, which corresponds to a 5 % difference. For multinational companies, it is a shift from 35 to 25%, which corresponds to a difference of 9%. The reduction for multinationals is almost twice as high as for SMEs.

It is also, and above all, necessary to consider the manna of this rate reduction. What is the budget of the latter in the corporate tax reform? It is about 5 billion euros in terms of interest rate cuts.

From these five billion, what amount benefits SMEs and what amount benefits large companies? More or less 123 million are allocated to the reduction of interest rates for SMEs. In other words, only 2.5% of the budget dedicated to the reduction of interest rates benefits SMEs who benefit from a reduced interest rate. All the rest, 97.5%, is devoted to the reduction of interest rates for large companies. Under these circumstances, who benefits from this corporate tax reform?

But we can go further and look at what the tax niches are. The latter have not been removed. The main tax niches that benefit multinationals, the surplus values, the dividends that are immunized, will continue to benefit the multinationals. However, a number of SMEs are excluded. Thus, for example, in the case of equity surplus, the conditions have been revised upwards. These are defined as Definitely Taxed Income (RDT). In doing so, a small and medium-sized enterprise which generates value-added on shares and which is not a major shareholder in absolute or relative terms of the holding company shall no longer be entitled to the immunisation of value-added on shares. However, multinational companies that are major shareholders continue to be entitled to exemption from the value added on shares. In addition, this exemption is raised to 100%. The same applies to the immunization of dividends via RDTs.

So, multinational companies will continue to benefit from tax niches that have even been expanded. Now, the deduction reaches 100%. As a result, even more multinationals will pay 0% tax on profits worth hundreds of millions or even billions of euros.