WRITTEN QUESTION P-1844/99

by Olivier Dupuis (TDI) to the Commission

(11 October 1999)

Subject: Article 58 Belgian law on bribes and compliance with competition rules

Article 58 of the Belgian Tax Code explicitly grants firms the right to give bribes, euphemistically defined as secret commissions, if such payments are acknowledged as standard practice, stating that the Finance Ministry may stipulate that the sums involved should be regarded as professional expenses, provided that the commissions do not exceed normal limits and that the firm pays the relevant taxes.

Is the Commission aware of this law on bribes in Belgium? Does it regard this law as being consistent with the letter and spirit of the Treaties? Has it been informed by Belgium of the countries in which that Member State regards such payments as being standard practice? In particular, can the Commission state whether Belgium regards such payments as standard practice in other Union countries? Moreover, does the Commission not regard the legalisation of bribes as a breach of the principles governing competition?

Answer given by Mr Bolkestein on behalf of the Commission

(8 November 1999)

In the absence of harmonisation measures, direct taxation falls within the Member States' sphere of competence, subject to observance of Community law and in particular the fundamental freedoms provided for by the Treaty.

As part of the efforts to combat corruption, the Council of the Organisation for Economic Cooperation and Development (OECD) adopted, in April 1996, a recommendation that its members should prohibit the tax deductibility of bribes paid to foreign public officials. The signing of the Convention of 17 December 1997 on combating bribery of foreign public officials in international business transactions, which was ratified by Belgium, has had a major impact on the revision of the contracting countries' legislation in implementation of the 1996 recommendation. In its communication of 21 May 1997 on the Community's anti-corruption policy, the Commission stated that it would raise the question of tax deductibility for bribes with the Member States in the appropriate fora, with a view to reaching consensus to abolish such provisions in the framework of a joint concerted move(1).

According to the information available to the Commission, Belgium has arrangements which, following authorisation from the Minister of Finance, allow secret commission to be treated, under certain conditions, as business expenditure where the firm pays tax on this commission, calculated at the standard rate, which is set by the Minister and may not be less than 20 %. However, Article 7 of the Law of 10 February 1999 on the elimination of corruption lays down that such authorisation may not be granted for obtaining or keeping public procurement contracts or administrative authorisations.

This new measure should enable Belgium to implement, as other Member States have already done or will do, the positions taken by the OECD and the Commission on ending the deductibility of bribes paid to foreign public officials.

(1) COM(97) 192 final.