Purchasing Power and Income-Equalization (BES-ISLANDS)
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The Dutch Parliament (“Eerste en Tweede Kamer”) voted to approve the rest of the “Belastingplan 2026”.
Introduction
With this change in the act, the Government wishes to achieve an income equalization that will have an effect on the purchasing power measure for the BES islands through a reduction of the income tax rate in the first bracket, combined with a simultaneous increase of the rate in the second bracket.
Background
The goal of these acts is equalization of the purchasing power and income in the BES islands. This will be achieved by lowering the income tax rate in the first tax bracket while simultaneously increasing the rate in the second tax bracket, and an amendment to the BES Income Tax Act adjusting the allocation key based on the most recently available population figures for the calculation of the table correction factor.
Fiscal Benefits
The proposal is to adjust the rate of the first bracket of the BES income tax downward (from the current 30.4% to the proposed 29.4%), while simultaneously adjusting (increasing) the rate of the second income tax bracket (from the current 35.4% to the proposed 38.4%), in order to ensure that the reduction of the first-bracket rate is budget-neutral.
Attention points
The acts must now still be formally adopted by the King and subsequently promulgated in the Official Gazette (in Dutch: Staatsblad) of the Kingdom of the Netherlands.
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