In our news item from December last year, we had already reported on the (at that time preliminary) draft bill that would bring significant changes to the existing VAT compliance and VAT refund processes, as well as to the VAT procedural rules. These changes are also referred to as the so-called “VAT chain” reform. Please see here: Reform of periodic VAT returns (mytaxcompass.be)

The Minister of Finance released a proposal for the first phase of the envisaged large tax reform.  If adopted, the proposed measures will generally apply as from 1 January 2024. The second phase is to be decided by the next government after the general election in 2024.

The proposal aims to shift the tax burden away from labor toward consumption and capital. Additionally, it aims to strengthen the competitiveness of businesses by revamping tax incentives. The proposed measures seem to take into account the observations and recommendations of international institutions, such as the European Commission, OECD and IMF. While the reduction of the tax burden on labor is important because the tax wedge is the highest in the EU for those who earn an average wage, the measures come at a cost for the Belgian budget which needs to be financed. When evaluating this proposal, the Government should be mindful that the compensating measures to finance the budgetary expenditures do not adversely impact the investment climate in Belgium.