German Finance Minister Peer Steinbrueck has denied reports that the government is planning to bring forward cuts in the amount of tax paid by German companies by one year to 2007.
According to a report by German daily Sueddeutsche Zeitung, Steinbrueck has said that he wants to accelerate the pace of corporate tax reform to stave off growing competition for investment from the new EU member states in Eastern Europe which have been cutting tax rates aggressively in recent times.
At present, large companies in Germany pay a basic 25% corporate tax. However, this is on top of local company taxes, charged at around 13%, making a nominal corporate tax rate of 38% - one of the highest in Europe. Meanwhile, small and medium-sized firms are taxed on a different legal basis, on a scale of between 15% and 42%.
Under the reforms, it is intended that small businesses will pay the same rates as large firms in a bid to simplify the country's notoriously ponderous company tax system.
However, the finance minister has since denied that he wants to bring forward the reforms to 2007, and has said that the changes will be carried out in 2008 "as planned."
Steinbrueck added that the reform proposals will be announced at the end of this month.
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