How Would the Design of an Alternative Minimum Tax Impact the Effective Corporate Tax Rate in Belgium?

26 Pages Posted: 24 May 2013

See all articles by Vincent Daxbek

Vincent Daxbek

Université Libre de Bruxelles (ULB)

Antonio Estache

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES)

Date Written: May 2013

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.

Keywords: alternative minimum taxes, Belgium, corporate taxes, effective tax rates, presumptive taxation, tax avoidance

JEL Classification: H20, H25, H26, H32

Suggested Citation

Daxbek, Vincent and Estache, Antonio, How Would the Design of an Alternative Minimum Tax Impact the Effective Corporate Tax Rate in Belgium? (May 2013). CEPR Discussion Paper No. DP9481. Available at SSRN: https://ssrn.com/abstract=2269475

Vincent Daxbek (Contact Author)

Université Libre de Bruxelles (ULB) ( email )

CP 132 Av FD Roosevelt 50
Brussels, Brussels 1050
Belgium

Antonio Estache

Université Libre de Bruxelles (ULB) - European Center for Advanced Research in Economics and Statistics (ECARES) ( email )

Ave. Franklin D Roosevelt, 50 - C.P. 114
Brussels, B-1050
Belgium
32 (0)2 6503838 (Phone)

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