German Corporate Tax Cut May Be Passed By The Summer

by Ulrika Lomas, Tax-News.com, Brussels

05 April 2005

Germany’s conservative opposition has reportedly stated that the new corporate tax cut proposed by Chancellor Gerhard Schroeder will be passed by parliament as early as this coming summer.

"We won't block a quick solution," chancellery spokesman Martin Neumeyer was quoted as announcing in weekly magazine, Der Spiegel. He continued: "We will be able to pass the tax reform before (parliament's) summer recess (in the second week of July)."

While the opposition is in principle behind the proposal to cut the basic rate of corporate income tax to 19% from 25%, the parties have yet to reach an agreement on how this EUR6 billion tax cut will be funded.

The government favours an end to tax breaks for certain special purpose media investment funds, higher taxes on dividends and more limits on firms' ability to carry over losses. However, opposition lawmakers believe that much of the shortfall will be offset by higher revenues from companies who will pay more taxes in Germany rather than move profits offshore.

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