KPMG Meijburg & Co has sent the Deputy Minister of Finance a response to the consultation document the Ministry of Finance published on June 15, 2009, on possible corporate income tax law amendments.
The consultation document comprises three parts:
- Implementing a mandatory group interest box, with an effective tax rate of 5% imposed on interest received, with interest paid being eligible for deduction at an effective rate of 5%.
- Implementing possible interest-deduction restrictions regarding participation interest and acquisition holdings or, alternatively, a general earnings-stripping provision.
- Relaxing the participation exemption, entailing a partial return to the participation exemption system that existed prior to the amendments that entered into effect on January 1, 2007.
One of the objectives in publishing the consultation document was to obtain public responses that might provide more insight into the areas in which choices have to be made. KPMG Meijburg & Co gladly availed itself of the opportunity to respond to the consultation document. Given the extensive variety of clients who would be positively or negatively affected, or completely unaffected, by all or part of the proposals, we were unable to render any aid with regard to the choices to be made.
Many taxpayers themselves are also finding it no easy task to assume a position on the issue, given the fact that no announcement has been made regarding how any revenue achieved by the measures would be reinvested in the corporate income tax realm. Our response was thus strictly neutral in tone and entirely technical in nature. We primarily addressed the signs of possible imperfections in the proposed measures and listed issues that might be taken into consideration when drafting the final statutory text and explanatory notes.
The Ministry of Finance has set a deadline of August 1, 2009, for public response to the consultation. This seems to imply that the Ministry is planning an implementation date of January 1, 2010, for either the whole or part of the package of measures. The Cabinet intends to present a bill to the Lower House after the summer. Together with the bill, a proposal will be made for how to reinvest the revenue from the measures in the corporate income tax realm.