Ministry of Finance announces tax reform
Earlier in 2004 the State Secretary of Finance announced plans for revising the Dutch corporate income tax system to improve the Dutch investment climate and to make the Dutch corporate income tax rules compliant with EU rules where necessary.
Although more details of the reform will be revealed in the course of 2005, the Budget for the year 2005, which was presented in September, already provided a beginning of bringing the Dutch tax system back in line with other EU countries. This is achieved by reducing the tax rate in a few steps to 30%.
As of 1 January 2005, the Dutch corporate income tax (“CIT”) rate is reduced from 34.5% to 31.5%. This percentage is further reduced to 30.5% as of 1 January 2006 and to 30% as of 1 January 2007. The reduced tax rate of 29% for profits up to EUR 22,689 will go down to 27% to 26% and 25% respectively. For financial years differing from the calendar year, the rates are applied on a pro rated basis using the number of days in each calendar year as determining factor.
