The international corporate taxation environment is rapidly changing. In recent years, at the instigation of the OECD and with the support of the G20, various measures have been taken to prevent the corporate tax base from being eroded and profits being transferred purely for tax reasons.

Recently, some European countries have also cut their corporate tax rates or intend to do so. The United States decided to reduce the tax rate as part of a radical reform of corporation tax, and that is also increasing the tax competition in Europe. This suggests that the trend towards declining corporation tax rates has resumed, after coming to a halt in the aftermath of the financial and economic crisis.

In view of the changed international environment, it was advisable to reform Belgian corporation tax. That was done by the Law of 25 December 2017, which lowered the nominal tax rate and extended the tax base. If the Belgian tax rate were to deviate too far from that in the other EU Member States, that could make Belgium far less attractive as a location for the activities of multinational companies.

Further European coordination in regard to corporation tax is also desirable, in line with the findings of the optimal tax theory. The EC intends to introduce a common consolidated tax base in the EU, but it would also be sensible to agree on minimum rates.

Those are the conclusions of the National Bank of Belgium in an article just published in the Economic Review. They are in line with the study which the Bank published on 6 December 2017 on the macroeconomic and budgetary aspects of the corporation tax reform in Belgium.