On the third Tuesday of September, as usual, the Tax Plan was presented to the Dutch parliament. It's a substantial package, though a bit less than we've seen in recent years. This isn't necessarily a bad development, as many changes typically don't excite taxpayers. We'll see in the coming years whether this is due to the new government, the new State Secretary of Finance, or pure coincidence. Something carried over from the previous government is that the Tax Plan is once again policy-light. This can't be fully blamed on the government, as they have only been in office for a short time. Developing policy naturally takes time. However, to my satisfaction, the State Secretary has stated that he will not establish a simplification committee. There ar e still plenty of ideas from past years ready to be implemented. Moreover, committees often cause delays. Another positive point is that the minister intends to seriously tackle the removal of ineffective and inefficient tax schemes. There are many such schemes in the Netherlands, as highlighted by an inventory of 116 tax schemes conducted by the previous Finance Minister.
Returning to BP 2025, it's notable that a separate BP has been prepared for the BES. This is the first time and does justice to the local system. However, it's not really a BP but rather a series of diverse adjustments in the fiscal BES legislation. This is fine, although I wonder if so many changes are necessary for the relatively limited scope of BES taxes. In my view, it could have been less. I won't delve further into these proposals, as this has been extensively covered by this newspaper. Instead, I'll touch on a few other proposals.
A curious phenomenon is that several schemes recently implemented by the previous government, but not yet enacted, are being reversed or adjusted. An example is the 30% ruling for expats sent to the Netherlands. The previous government wanted to phase out the 30% allowance over 20 months to 20%, and finally to 10%. The rationale was that extraterritorial costs decrease the longer one stays in the Netherlands. The new government considers this too extreme and is reversing the measure, though reducing the 30% to 27%.
Another regulation dismantled by the previous government, or rather the Parliament, involves taxing share buybacks. Under certain conditions, such buybacks are tax-free, but the former Parliament wanted to change that. Through amendment, they succeeded, causing resistance in the business community, as the regulation supports the business climate. The current government shares this view and is reversing the measure. Share buybacks remain tax-free under conditions. This puts policy consistency under pressure, but such inconsistency is inherent in the formation of a new government. This also applies to the substantial interest rate, which was increased by 2% under the previous government and will be reversed next year, returning to 31% for substantial interest benefits over €67,000, while below it remains 24.5%.
A similar zigzag policy is evident in the donation scheme, where a recently introduced rule is reversed again. In conjunction with this, the donation deduction in corporate tax is ended. This is appropriate in my view: a gift deduction does not belong in a profit tax. I also support abolishing the donation deduction in income tax: if you support a good cause, no tax facility is necessary. Moreover, the donation deduction has led to unintended use—such as donations to one's own foundations—and is difficult for the tax authorities to control.
A measure causing much commotion is the increase of the low VAT rate from 9% to 21%, particularly for certain services in the sports and cultural sectors. Such protests are understandable but not logical. Research shows that a low VAT rate is neither effective nor efficient, making it unwise for government use. A system with a single VAT rate would be better. Thus, I support the measure and believe it could be expanded to other goods and services or, better yet, the low rate abolished, with the revenue returned to citizens, preferably by reducing the tax burden on labor. It would make sense to phase the VAT increase in annual steps, a 12% rise that could be implemented in three annual steps of 4%. Perhaps parliament will enforce something similar.
Finally, a notable measure is the significant increase in the gaming tax rate from about 30.5% to 37.8%, a 25% rise. This is a major concern for the sector, raising questions about its viability. In Curaҫao, such a measure would likely face strong opposition.
Peter Kavelaars is a Professor of Tax Economics at Erasmus University Rotterdam and of counsel at Deloitte Dutch Caribbean.