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 withs 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 Belgiums 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 governments 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.
BELGIUM TO SIMPLIFY BOURSE TAX SYSTEM