Avoid unilateral national solutions and an EU digital levy – Keep additional red tape to a minimum – Modernize and simplify corporate tax law
A total of 130 states in the OECD Inclusive Framework have agreed on the key points for reforming international corporate taxation, thus taking the reform of the global taxation system into a crucial phase. The negotiations, which have been ongoing for many years, aim to adapt the international tax rules to the digital challenges and introduce an effective minimum global tax rate.
“It is now crucial to have unified international implementation of the reform. In particular, companies in the export-oriented automotive industry are very international and need a balanced set of rules coordinated among the states,” explained VDA President Hildegard Müller.
“In addition, policy-makers have to ensure that implementation of the new global rules has a secure legal basis, the red tape for businesses is limited, and double taxation is avoided. The states should pay special attention to that in the approaching negotiations on the technical details and find appropriate and feasible solutions for the businesses,” Müller stated.
Overall, appropriate tax-policies have to be prepared not only at international level, but also in Europe and Germany.
“When it comes to taxing the digital economy, the EU is unfortunately heading into a dead end. It is counterproductive and extremely risky to introduce a European digital levy in parallel to the international negotiations. The German Government must unequivocally reject this unilateral path pursued by the EU. Otherwise the international trade disputes could escalate, which would impact heavily not least on the economic recovery,” Müller warned.
“Furthermore, the next German Government will have to tackle the need for major tax reforms at national level – and take bold action. The corporate tax legislation is in urgent need of thorough modernization and simplification. An effective global minimum level of taxation must be used as an opportunity to extensively clarify the thicket of anti-abuse regulations in German corporate tax law. It is high time to face up to the reality in international taxation and adjust the minimum rate in international taxation law to 15 percent,” said Müller.