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How would the design of an alternative minimum tax impact the effective corporate tax rate in Belgium?

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  • Estache, Antonio
  • Daxbek, Vincent

Abstract

The main purpose of this paper is to provide an assessment of the impact of the introduction of an alternative minimum tax (AMT) in Belgium with a focus on the impact on various distortions margins. In the process, we provide an up-to date account of the state of effective corporate taxation in the country. The current ETR is 15.7%. For a 1% of GDP increase in revenue, the ETR of an income based AMT would increase to 24.3% illustrating the potential payoff of a significant simplification of the current system. For a politically viable asset based AMT, it would roughly double the ETR. An income based AMT would somewhat reduce the distortions across sectors and firms sizes while an asset based AMT would increase it. As expected, an asset based AMT would penalize more large firms since they are more capital intensive. Small firms could actually be better off under an asset based AMT than under an income based AMT. But any decision on the AMT in Belgium is likely to be polarizing. Small firms currently represent 84% of the number of businesses, 35% of the jobs and 22.4% of the tax revenue. Large and very large firms represent less than 4% of the number of business but almost 50% of the jobs and over 60% of the tax revenue.

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  • Estache, Antonio & Daxbek, Vincent, 2013. "How would the design of an alternative minimum tax impact the effective corporate tax rate in Belgium?," CEPR Discussion Papers 9481, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:9481
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    References listed on IDEAS

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    1. Caren Sureth & Ralf Maiterth, 2008. "The impact of minimum taxation by an imputable wealth tax on capital budgeting and business strategy of German companies," Review of Managerial Science, Springer, vol. 2(2), pages 81-110, July.
    2. Sureth, Caren & Maiterth, Ralf, 2005. "Wealth tax as alternative minimum tax? The impact of a wealth tax on business structure and strategy," arqus Discussion Papers in Quantitative Tax Research 3, arqus - Arbeitskreis Quantitative Steuerlehre.
    3. Joanna Piotrowska & Werner Vanborren, 2008. "The corporate income tax rate-revenue paradox: Evidence in the EU," Taxation Papers 12, Directorate General Taxation and Customs Union, European Commission, revised Oct 2008.
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    More about this item

    Keywords

    Corporate taxes; Tax avoidance; Alternative minimum taxes; Presumptive taxation; Effective tax rates; Belgium;
    All these keywords.

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies
    • H26 - Public Economics - - Taxation, Subsidies, and Revenue - - - Tax Evasion and Avoidance
    • H32 - Public Economics - - Fiscal Policies and Behavior of Economic Agents - - - Firm

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