BRUSSEL: The International Monetary Fund has proposed that Belgium should build on recent tax reform measures with growth oriented policies. In a new report for the country, the IMF said Belgium should complement the proposed cuts to corporate income tax with further measures to address remaining distortions in the tax system and put forward a number of policy options. Under the proposals, corporate tax, currently 33.99 percent including the solidarity contribution, will be lowered to 29 percent in 2018, and to 25 percent in 2020. In addition, the solidarity contribution will be phased out. The levy will be reduced from three percent to two percent next year, and to zero percent in 2020. The agreement also includes cuts to corporate tax for small businesses, which will pay 20 percent income tax on the first EUR100,000 (USD116,400) of income from 2018, instead of 25 percent tax under current rules. However, small companies would have to pay one director remuneration of at least EUR45,000 per year to qualify for the reduced income tax. The IMF report observed that: “We welcome the Government’s efforts to reform the corporate income tax system to enhance Belgium’s growth potential. The proposed reform, which aims to be revenue neutral, appropriately lowers the statutory rate while broadening the tax base, including through anti-tax avoidance measures and by reducing the cost of the notional interest rate deduction. The planned next phases of the tax shift, which will further reduce the labor tax wedge, will require additional offsetting measures to safeguard revenues.” “To this end, and to promote efficiency, these reforms should be complemented by measures that broaden the tax base and address distortions in the tax system. Environmental taxation could be strengthened and certain deductions and exemptions, including on VAT and company cars, could be eliminated. Moreover, to create a more level playing field across business and investment activities, it would be useful to review other aspects of the tax system, including: the taxation of interest, dividends, and capital gains; the targeting of profit tax deductions; the preferential tax treatment of rental income and real estate; and tax preferences on savings accounts.”