Tax Plan: further simplification

The tax system needs to be simplified. The government is therefore again taking measures this year to make taxes less complex for the Tax and Customs Administration and taxpayers alike.

'Every Tax Plan has to put forward new proposals to make the system simpler,' said the State Secretary for Finance, Eric Wiebes. 'It’s a must. We have to make the system more straightforward.'

The State Secretary has written to the House of Representatives to underline the importance of this issue, and this year’s Tax Plan also includes a bill to simplify taxation. Its proposals include ending the confusing practice of making different kinds of payment arrangements with people who owe money to the Tax and Customs Administration. This means the various arrangements for repaying tax- and benefit-related debts will be standardised. The Tax Plan also includes a bill providing tax incentives to encourage entrepreneurs to end their self-administered pensions. The complex pension rules for director-major shareholders place an extra administrative burden on entrepreneurs and create a dividend trap that prevents money leaving their businesses.

Purchasing power

The Tax Plan again provides for a balanced increase in purchasing power this year. The elderly and the young, one- and two-income households, families and single persons will on the whole be better off in 2017. Companies, especially small and medium-sized enterprises, will benefit from an extension of the lowest corporation tax bracket. A greater share of their profits will therefore be taxed at the 20% rate.

Tax climate for businesses

Together with the Tax Plan, the State Secretary is sending a letter on the tax climate to the House of Representatives. It explains how the government intends to ensure the Netherlands remains an attractive business location in the future. The government will continue to vigorously tackle tax avoidance while in the coming years reducing corporation tax rates to a level that is competitive with those in other European countries. The Tax Plan sets out steps in that direction. It contains several anti-abuse measures to prevent tax avoidance, and the extension of the first corporation tax bracket will reduce the tax burden on business.