US tax reform bad for German industry

BDI Director General Joachim Lang has sharply criticised the US tax reform plans, saying they are not compatible with internationally agreed tax principles and are protectionist in nature. Lang urges Germany to face the international tax competition swiftly.

“The tax reform plans presented by both houses of the US Congress will significantly increase tax competition. The proposed measures for cross-border companies, intended to finance the substantial tax cuts, would go much further than avoiding abusive structures and are clearly protectionist in nature. This kind of regulation is not compatible with internationally agreed tax principles and would lead to considerable double taxation for the companies concerned. Such measures would cause massive damage to companies in Germany and Europe.  

The US reform plans would further aggravate the competitive disadvantage of German companies. It is thus all the more important that Germany faces up to this international competition. The new federal government, whatever shape it takes, will need to launch structural improvements in corporate tax legislation as quickly as possible.  

Measures to increase tax for the digital economy, like those the EU finance ministers plan to initiate at the Ecofin Council meeting on Tuesday, are a step in the wrong direction. Targeted primarily at US companies, this move will be interpreted as a provocation by the US. The measures will also impact substantially on Industry 4.0 companies in Germany. Both the US and the EU should focus back on the internationally agreed tax principles and strengthen their collaboration. Unilateral measures endanger the integrity of the international tax system and can damage global value chains.”