Seize the outstretched hand of multinationals
Many international groups see Belgium as a spearhead for (green) investments. Let us not discourage them by unpredictable and non-contradictory tax treatment, in particular by the announced tightening of the transfer pricing regime.
As always, the new budget agreement consists of a battery of measures having as a common thread the renewal and modernization, among others, of the labor market, a tax reform (for the moment modest) and the effort of stimulus. Great, all of this is more than welcome! But let’s wait and see what will ultimately happen after the social consultation.
One aspect (which has become a great classic) has once again appeared in the package of measures envisaged.
Intra-group pricing again targeted
What is it about ? From the announcement of a tightening of the transfer pricing regime for multinational companies.
There is no doubt that artificial transactions and therefore manipulated profit transfers must be tackled.
Simply put, it’s about tightening the screw a bit more when it comes to the cross-border transactions within multinationals. These are apprehended with more and more suspicion, fear that intragroup pricing may not conform to the market. Let us be clear, there is no doubt that we need to tackle artificial transactions and, therefore, manipulated profit transfers. If additional resources are to be mobilized for this purpose, the goal can only be morally laudable. Over time, countless measures have already been taken at Belgian and international level to ensure that each country receives its fair share of the pie.
These measures always entail an additional administrative burden. Most of them are so recent that the impact of their implementation cannot yet be measured. And now we are already talking about additional measures … Let’s start by correctly applying the existing measures, with an open mind, and without too much stigma or prejudice. It should also be remembered that a consensus on general principles in this area is emerging at the international level, while admitting that the way in which a country like Belgium can influence the local branch of an international group raises many more questions than questions. answers. Despite the announcement of a strong international political commitment in favor of a minimum tax, the problem in this case is not the rate, but the basis on which the rate is applied. More economic activity means more profits and more profits brought more taxes in the Belgian money bag. There is nothing simpler than that.
Economic recovery
So what’s unfortunate about all of this? Isn’t it normal that multinationals make their contribution? Yes, like I said, sure, but keep in mind what we want to achieve at the end of the day: put Belgium back on the map, relaunch it.
It is clear that we need to focus on stimulating economic activity. Both at the local level via SMEs and via multinationals.
Judging by the way border countries have approached the issue, it is clear that we need to focus on stimulating economic activity. Both at the local level via SMEs and via multinationals. Nowadays, the distinction between the two also merits being qualified in many areas. For both of them, international expansion and a presence beyond our borders are the key to making the most of our unique situation, our brainpower and our open economy. If we operate internationally, we are obliged to structure this presence abroad in a tax and legal manner and therefore apply the transfer pricing system. It is, neither more nor less, than a necessary consequence.
All in all, the expected income that has been budgeted in this regard also confirms that the government is not inclined to equate transfer pricing with fraud. Companies speak precisely the same thing. The model of government-taxpayer cooperation as presented in the coalition agreement was greeted with some enthusiasm when the first steps were taken. Let us continue to work in this direction.
Fiscal stability
If we want the relaunch to be a success we need international actors ready to make Belgium their fulcrum, their knowledge center or their decision-making hub.
What matters are not tax freebies, but predictable and not contradictory tax treatment.
And you know, we’re seeing more and more bands actually going in that direction and see Belgium as a spearhead for (green) investments that put them on the map in a sustainable way. Whether or not these groups have their origins in Belgium makes little difference. What matters are not tax freebies, but predictable and not contradictory tax treatment. And remember: while there may not be an international tax consensus (let alone competition between countries), there is definitely a consensus that country where companies create real value may tax a larger portion of consolidated profit. So let’s put all our efforts into it, as the stimulus measures aim to do.
The adage “to each their own” may be a joke, but some countries in southern Europe or Latin America are notorious nightmares when it comes to navigating constant tax audits. As far as possible, we therefore stay at a distance. Do not give the impression that such a drift is also looming on the horizon here. It would be a shame, because the recovery is effective and rightly a top priority!