【From CFTInet, Beijing 08/25/2000】 CORPORATE TAXES
SIGNIFICANT DEVELOPMENTS
As of January 1, 1999 the euro is the official currency of those EU countries that are members of the European Monetary Union. There is a three-year transition period (see below). Also, the network of double-taxation treaties has been expanded (see "Payments to foreign affiliates").
TAXES ON CORPORATE INCOME
Basic rate/ The basic rate of corporation tax (Imp?t des société
s-Vennootschapsbelasting) is 39%. (The rate is increased by a 3% crisis tax levied on the 39%; effective rate 40.17% for tax year 1998.) "Secret commissions" (nonidentified payments) are taxed at a rate of 300% (309% including the crisis tax). The nonidentified payments, as well as the "secret commissions" tax, are tax deductible. For manufacturing and trading (i.e., nonfinancial) corporations, the basic tax rate of 39% (increased by the 3% crisis tax) is reduced according to a scale when taxable income does not exceed BEF13 million, provided the following is the case.
1. Another company (or companies) does not hold more than 50% of the shares.
2. The distributed dividend does not exceed 13% of the paid-up capital.
3. The company has attributed a remuneration of at least BEF 1 million to at least one Key individual-bedrijfsleider/dirigeant d'entreprise, who can fall into one of the following categories:
a. Directors, managers (gerants/zaakvoerders), Liquidators, or any other individual person exercising a similar function in a company;
b. An individual person exercising in a company, outside of an employment contract, an activity or a managerial function of a commercial, technical or financial nature or that relates to day-to-day management.
However, a company that has not attributed a remuneration of at least BEF 1 million to at least one Key individual can nevertheless apply the reduced tax rate, provided:
a. The taxable income is less than BEF 1 million; and
b. The remuneration attributed to a Key individual amounts to at least the taxable profit.
4. The company is not a member of a group disposing of a coordination center.
5. The company has no participations exceeding 50% of the paid-up capital or paid-up capital increased by the taxed reserves and capital gains. The amounts to be taken into consideration are those at the moment the financial statements are drawn up. Participations that exceed 75% of the capital of the issuing company are not considered for the purposes of this computation. All shareholdings, including those not viewed as
participations, are considered.
Surcharge/A surcharge of 9% (or tax year 1999 is applicable to the tax 50 computed. ibis can lit' avoided by making quarter advance payment equal to one-quarter of the estimated tax liability for the year. The tax credit with regard to the advance payments is calculated on the basis of the discount rate of the National Bank of Belgium in effect at January 1 of
the calendar year preceding the tax year. For the tax year 1999 the applica-ble rates are as follows.
QUARTI.RS DUE DATES BASES RATES
%
First April 10 1/4 of income tax 12
Second July 10 1/4 of income tax 10
Third October 10 1/4 of income tax 8
Fourth December 20 1/4 of income tax 6
Corporate income tax credit/Corporations subject to the corporate income tax at the reduced corporate income tax rates get a tax credit fixed at 7.5% of the diffe
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