Belgium Uses A Progressive Tax System For Personal Income Tax Accounting Essay

Belgium uses a progressive revenue enhancement system for personal income revenue enhancement get downing on January 1 and stoping December 31. For the assessment twelvemonth of 2010 the lowest rate is 25 % and the top revenue enhancement rate is 50 % for all income over 34,330 euros. Monthly withholding is compulsory in Belgium even for ego employed persons. Belgique allows for many common revenue enhancement tax write-offs, such as dependent tax write-offs for kids. Municipal revenue enhancements are besides added to personal income revenue enhancements. Municipal revenue enhancements are scope for 0 to 9.5 % of the revenue enhancement remunerator ‘s income revenue enhancement collectible (, 2010 ) . Belgique ‘s personal income revenue enhancement is one of the highest in the European Union Including societal security an person can stop up paying 57.5 % of their income to the Belgium authorities. The mean income revenue enhancement in Europe is 44.5 % ( expatica, 2009 ) . Persons who are non Belgium citizens but are populating in Belgium are merely taxed on income earned from a Belgium beginning. This is in an attempt to avoid dual revenue enhancement and non punish people for life in Belgium (, 2010 ) .

The corporate revenue enhancement rate in Belgium is 33.99 % . However, World Bank estimates that a 57 % revenue enhancement of net incomes really applies when all revenue enhancements, such as belongings and fuel revenue enhancements are added together ( World Bank, 2010 ) . Smaller companies can take advantage of a progressive rate construction that starts at 24.98 % . There are several demands a concern must run into to measure up for this progressive rate construction. The two major demands are that nonexempt income can non transcend 322,500 euros and no more than 50 % of the company can be owned by another company (, 2010 ) . For the most portion the revenue enhancement base of corporations is calculated utilizing accrual methods. This is the accrual of world-wide income, but typically income from a foreign subordinate is exempt from revenue enhancements. This is because of dual revenue enhancement pacts that Belgium has signed with many states to promote other states to make concern with them ( PWC ) .

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Belgique refers to their gross revenues revenue enhancement as a value added revenue enhancement ( VAT ) . The value added revenue enhancement is 21 % on the bulk of points. Lower rates of 12 % , 6 % , and 0 % apply to a certain points (, 2010 ) . Food and transit are illustrations of points that are taxed at a lower rate. It is a concern ‘s duty to roll up the value added revenue enhancement ( expatica, 2009 ) .


In 2005 Belgium made the passage from Belgian GAAP to the International Financial Reporting Standards ( IFRS ) . The European Union requires all companies ‘ amalgamate fiscal statements listed in the market to be in convergence with IFRS as adopted by the EU, effectual January 2005. In add-on to this states of the EU must let the usage of IFRS for unlisted companies and for unconsolidated fiscal statements of parent companies. Other companies were permitted to set off the acceptance of IFRS until 2007, such as a company who is listed in the United States and uses US GAAP ( Deloitte, 2010 ) .

The IFRS are a set of criterions created by the International Accounting Standards Board ( IASB ) . The IASB ‘s end was to make a set of criterions that would unite fiscal accounting across the universe. The EU ‘s determination to exchange to implement IFRS was a big measure in alining capital markets across the universe. This means that 7,000 European companies are now in conformity with IFRS. The execution of IFRS is supposed to do capital cheaper to EU companies because it will now be easier to compare fiscal statements across boundary lines. The usage of common criterions should do the EU market more globally crystalline and competitory. By following IFRS alternatively of US GAAP the EU has put the United States now in a place to besides thin towards convergence with IFRS.

Even with the EU ‘s effort to meet to IFRS there have been some obstructions. The EU has merely adopted the EU ‘s version of IFRS. The EU has non converged with IFRS wholly as the IASB devised the criterions. This version merely mandates the IFRS criterions that the EU has approved. A batch of the contention over IFRS came because of the increased usage of just values alternatively of historical values. This caused the EU to take parts of IAS 39 which focused on just valuing fiscal instruments on the balance sheet. This will likely decelerate the convergence between US GAAP and IFRS, finally decelerating down a true planetary set of accounting criterions ( Larson, 2009 ) . Besides, the EU member companies still rely to a great extent on their national GAAP for points other so amalgamate fiscal statements. Some kind of national GAAP is normally still used by companies in countries where IFRS is non compulsory, such as for unconsolidated fiscal statements or unlisted companies. Besides, National GAAP ‘s, such as the Belgian GAAP are still used as a revenue enhancement base for EU listed companies because they are historical in nature ( Peyret, 2010 ) . The EU is dedicated to the passage towards IFRS and off from national GAAP ‘s but the convergence is still in procedure.



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