The Belgian Program Law of 1 July 2016 has broadened the scope of application of the existing reporting obligation for payments to tax havens. The main consequence is that Belgian companies and permanent establishments will soon have to disclose to the Belgian tax administration any payments they make to Hong Kong based persons or entities, provided that the total amount of tax haven payments made during a certain taxable period exceeds 100.000 EUR.
The reporting has to be done using a special tax form that has to be annexed to the relevant entity’s annual corporate income tax return. Failure to comply with this obligation is sanctioned with the relevant unreported payments not being tax deductible. And even where this reporting obligation has been duly complied with, the tax deductibility of the relevant payments is subject to an increased burden of proof.
There is still some uncertainty with respect to the exact date on which the new reporting rules will enter into force. This will depend on when exactly the Belgian government will issue the Royal Decree that formally indicates Hong Kong as a targeted “tax haven” jurisdiction.