Plan to fight major tax fraud

Minister of Finance Johan Van Overtveldt has a plan ready with which he intends to boost the fight against major tax fraud significantly, thus creating more fiscal justice. “You can’t expect the average citizen to pay his taxes obediently, while others use sophisticated constructions to avoid paying their dues,” said the Minister. The new plan is set to bring in 425 million euros once it’s up and running.

“Firstly, we have thoroughly analysed what the exact causes of fiscal fraud actually are. That is the most important condition to be able to fight it effectively,” Johan Van Overtveldt explains. “We have defined eleven fundamental causes and subsequently looked carefully at how we can eliminate them. One of those causes is, for example, the complexity of our legislation, another is our high tax burden. These are all elements which we must tackle, something we already do to a great extent in fact.” For example, Minister Van Overtveldt applied a number of simplifications to VAT legislation in mid-2015 already. In addition, this federal government is the first in a long time to decrease the fiscal burden on labour in Belgium via a tax shift in which the reduction of charges exceeds the increase of charges.

Preventing and punishing fraud
The new anti-fraud plan contains a number of very substantial measures to prevent fiscal fraud from happening in the first place, to detect it and to punish it. For example, the new generation of companies in the sharing economy, such as Uber and Airbnb, must now get their fiscal houses in order, so that a level playing field for trade exists for all. Another measure is extending the so-called Antigoon doctrine (concerning lawfulness of evidence) from social to fiscal legislation. This means that unlawfully obtained evidence can no longer be declared void if it can be useful to solve major fraud cases.

Focus on major fraud
Major fraud is not only enshrined in sophisticated constructions, but as a rule also surpasses country borders. “So this is a fight that must by definition be embarked upon in cooperation with other countries,” Johan Van Overtveldt states. One of the new measures in the fight against international fraud is reinforcing the Transfer Pricing Unit. Transfer prices are the prices applied to services, goods or rights which connected companies, such as a parent company and a subsidiary, supply to each other. “We will ensure that fiscal rules are also respected in this regard. In addition, a new guideline will be put in place which will make declaration obligatory when a certain threshold is reached. After all, fighting fraud must not become a witch-hunt against normal citizens. The fight must be focused on major, international fraud. And that’s exactly what this plan does,” the Minister concludes.