The Tax Department started information sessions in connection with the introduction of Fiscal Reform 2023
They met with multiple stakeholders. These meetings were successful; the stakeholder’s contributions were significant as they provided feedback, suggestions, and possible solutions.
Compensations
Crucial feedback was the impact of a new tax system, namely the sales tax called VAT, Value Added Tax, on the purchasing power of the people.
To counter this effect, they proposed various reductions and compensations that need to go hand in hand with the introduction of the BTW. These compensations entail a significant reduction in the income and wage tax tariff and the increase of the income-tax-free ceiling to Afl. 36.000. It means that more than 40 thousand individuals (employees and retirees) with a yearly income of up to Afl. 36.000, that will no longer pay income and wage tax. In addition, this will be a significant relief for most retirees who have been urging the Government for many years to exempt them from these taxes.
The Tax department explained that the income tax and wage tax reduction are included in the plans, as is the expansion of the income bracket in the wage and income tax tables. The Tax Department is also planning to start applying a tax on tips received based on the policy applicable in the Netherlands and a salary norm standard for directors and controlling shareholders.
They are also proposing an increase in welfare aid and restore allowance starting January 1, 2023, for employees and the elderly.
Better tax compliance
The Tax Department emphasized that the new VAT system will guarantee better tax compliance in general.
Hence they can reduce other taxes and provide additional support to the most vulnerable in the community so that they can have more money in their wallet. This will reduce the inflation impact caused by the introduction of the VAT system.
In the upcoming weeks, the Tax Department will organize Break Out sessions to continue the deliberations with the stakeholders on the reform concepts. The received feedback and ideas presented will be processed by the Tax Department, including the calculations related to the fiscal reform.
