Law firm Baker McKenzie concludes that the Netherlands’ business climate has become less attractive due to an unpredictable government policy. At first, the abolition of the dividend tax did not continue and now the corporation tax is being lowered less rapidly than previously announced. Peter Kavelaars, Professor of Fiscal Economics at Erasmus School of Economics, partly agrees with the analysis of Baker McKenzie.
Kavelaars believes that it is not right to take measures first and then to withdraw them. ‘That does not benefit legal certainty. The rest of the world will have some doubts about our tax policy. It will not improve our reputation, but it will not make it worse either. If very far-reaching measures were to be revoked, or if they were to be revoked at a high frequency, this would give a really bad picture of the Netherlands in terms of its fiscal policy, and we should certainly refrain from doing so.’
‘The dividend tax was indeed a difficult issue, and fortunately this is less so in the case of corporation tax. On the other hand, of course, it is true that the government may need to think a little bit more carefully before taking measures and rushing them through the States General, in order to prevent this from happening again. In that sense, I do share the conclusion.’
According to Kavelaars, there is another catch that has not been signalled yet. ‘The lowering of the corporation tax, as announced last year, was financed by an increase in the tax burden on business and this has already started this year. So, if they reverse part of the decrease, the increase should also be reversed. However, I have the impression that this is not going to happen.’
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Listen to the entire item on BNR Nieuwsradio, 17 September 2019 (in Dutch).