Germany announced new tax simplification law

Source: Janine Bernsdorf¸ PKF Malta¸ 31 January 2012

According to latest news¸ financial experts of the black-yellow coalition government introduced a second tax simplification package that should be adopted in 2012. A tax simplification law had already been passed last year in order to simplify the German tax law and to reduce the bureaucratic burden on individuals. The second tax simplification package is mainly targeted at business by shortening the retention periods for tax records and changes in calculating travel expenses. As Christian von Stetten¸ Christian Democratic Union Party (CDU)¸ recently announced¸ the government’s first tax simplification law was “too little”.

Even if last year’s first simplification tax law caused a long internal dispute and therefore further plans were not provided for now¸ German Finance Minister Wolfgang Schäuble has nevertheless announced plans to simplify the country’s corporate tax law. Moreover¸ a working group has recently drafted a report outlining various concrete proposals including reforms in the area of travel expenses and accommodation expenses¸ which lead to a reduction of administrative burdens for businesses and administrations. A simplification of the tax law had been demanded by the trade associations for years as the administrative costs for employers had accounted for several billion Euros. Furthermore¸ the tax simplification law should overcome the particular difficulties currently facing small- and medium-sized companies in Germany seeking to comply with administrative rules.

According to reports of “World Online”¸ second tax simplification package for travel expenses is no longer to be treated as a single project¸ but linked to other reforms. Therefore¸ the changes could not only find their application in business¸ but also assert citizens. CDU politician Stetten as well as FDP financial experts have called for the support of German Finance Minister Wolfgang Schäuble and expect a bill on a proposed 2012 tax simplification package in March at the latest. The bill could be then discussed in detail. However¸ the Ministry of Finance further commented that they have given their political consent to changes in the corporate tax law only. Nevertheless¸ the Ministry of Finance wishes to cooperate and assured that any good proposals will be considered as long as the proposals are cost neutral and do not lead to a shortfall in tax revenues.

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