Belgium ranks 154th out of 178 countries due to its high tax burden

• how often taxes have to be paid (how many different payments are involved)
• how much time it takes to comply with all tax requirements (completion of documents and arranging the payments);
• the total tax burden, which takes account of taxes including corporation tax, social security contributions, wage costs (paid by the employer), taxes on dividends, taxes on financial transactions, taxes on waste, road and car taxes, property taxes and wealth taxes.
  
  “Overall, Belgium comes in 65th in this ranking. But Belgium again lags at the back of the field in international comparisons of tax rates,” says Frank Dierckx, Managing Partner, PwC Tax Consultants Belgium. “In 154th place out of 178 countries studied, we come behind almost all other European countries. Only France and Italy score even worse within Europe. This is hardly a surprise, because Belgium has a very high tax burden, with the highest rate of personal income tax at about 54% (including local authority tax), personal social security contributions of above 13% and employers' social security contributions of 35% on salaries, 21% VAT and 34% corporation tax,” Dierckx concludes.
  
  
  This year, 31 economies improved their business tax systems, and 65 have done so over the past three years. Bulgaria was the top reformer, and Turkey was the runner-up.
  This year, the top economies with the best overall tax ratings are, 1. the Maldives, 2. Singapore, 3. Hong Kong (China), 4. the United Arab Emirates, and 5. Oman. Ireland was the top European country, with a creditable sixth place.
  
  Tax reforms
  While reducing corporate income tax was the most popular reform, implemented in 27 economies worldwide, many countries have reduced the compliance burden by simplifying or eliminating other business taxes. Countries in eastern Europe and central Asia had the most reforms in 2006 and 2007, but tax rates remain highest there and in Africa.
  
  The case of Egypt is instructive. Two years ago it implemented major tax reforms, which included reducing the corporate income tax rate by almost half. This has increased the government’s tax base and revenues.
  
  The Belgian government has also taken measures to reduce the tax burden: this has even been high on its list of priorities. Frank Dierckx comments, “Taxes and the percentage of income paid for social security remained at 44.2% of GDP in 2007. This is exactly the same as in 2006, which shows that the targets are not being attained. In absolute terms, Belgium still has a very high tax burden although, in comparative terms, we get a lot back for it: social security, refunds of health-care costs, infrastructure in various forms, etc."
  
  “Reducing the tax burden was the second-most-popular reform of the business regulatory environment this year. Despite previous reluctance to reduce tax burdens for fear of cutting government revenues, some governments that have implemented tax reforms have reaped the benefit of higher investment and economic growth,” says Rita Ramalho, co-author of the report and tax specialist with the World Bank–IFC Doing Business project. “Economies with a lower business tax burden also have more new firms entering the market, since fiscal policy is decisive in attracting investment.”
  
  The European Union
  The European Union illustrates how widely tax systems vary. Three countries are in the top 15 easy-tax countries: Ireland (6), the United Kingdom (12), and Denmark (13). But three others rank in the bottom third globally: Poland (125), Hungary (127), and Romania (134). Overall, Belgium comes in 65th in this ranking. With regard to the number of times that taxes have to be paid, our country is in 24th place (again out of 178 countries). The time that has to be invested in all the regulations dealing with taxation is better than expected. There we come in 49th, and overall a Belgian company spends an average of 156 hours a year on this. But when it comes to the overall tax burden, we come in in 154th place.
  
  “Despite this heavy burden, Belgian fiscal policy has improved significantly in recent years. In this regard, we could mention the notional interest deduction, reduction in personal income tax and, more recently, the introduction of VAT grouping,” says Dierckx. “But there is still a long way to go, and there is fierce competition with other countries. That is why it is necessary to change our fiscal policy continually, because it is one of the crucial factors in attracting investment.”
  
  

• for journalists: from Vanessa Slegers at Luna: 02 658 02 93 or vanessa@luna.be ;
• for other interested parties: from Isabelle Jacobs at PwC: 02 710 71 40 or isabelle.jacobs@pwc.be or Rebecca Ong, World Bank Group, tel: +1 202 458 0434, e-mail: rong@ifc.org