BELGIUM TO SIMPLIFY BOURSE TAX SYSTEM
Belgian Finance Minister Mark Eyskens
said he will announce measures in the next few days making it
easier for non-residents to recoup the 25 pct withholding tax
levied on investment income in Belgium.
    In an interview with Reuters, Eyskens also said he hoped
the cabinet would tomorrow approve the abolition of bourse
transaction taxes for non-residents, making Brussels one of the
few stock exchanges in the world where foreign investors were
not subjected to such a tax.
    He said both measures were aimed at attracting capital
imports, reducing Belgium's heavy net capital outflows.
    Under the present system, non-residents pay withholding tax
on their income from Belgian investments and can then reclaim
it from Belgian authorities.
    But financial analysts said the procedure for recouping the
tax is so bureaucratic and slow that it effectively acts as a
barrier to foreign investment in Belgium, especially in the
secondary bond market.
    Eyskens said he was ready to "simplify and eventually
suppress" the procedure for non-residents and would announce
details in the next few days.
    Financial analysts said the move would be far more
significant than the imminent abolition for non-residents of
the minimal bourse transaction taxes. These are set at three
rates - 0.07 pct, 0.14 pct and 0.35 pct - according to the type
of paper transacted.
    Eyskens said he hoped later to be able to abolish the
transaction taxes for residents as well, but this would depend
on progress in cutting the government's high budget deficit.
    He called the current 25 pct level of witholding tax "much
too high" and said he hoped to reduce it in the longer term,
perhaps as part of an overall reform of Belgian tax.
    But he added this would have to be done progressively
because of its budgetary impact. The tax raises 170 billion
francs a year in revenues, he said.
    Eyskens envisaged a cut to a basic 15 pct, after which a
rate could be set for each new security issued.
    He said that as well as aggravating net capital outflows,
the high rate of withholding tax also meant the treasury was
forced to borrow at higher interest rates.
    But he said it was politically impossible to reduce taxes
on investment income before those on earned income had been cut
as part of the tax reform, planned for late 1980s.
 REUTER
