The BDI welcomes the draft as an important step toward a low-bureaucracy implementation of international minimum tax rules. Nevertheless, in our view, it falls short of expectations in several key areas.

Lack of Simplification Measures and Clarifications

The draft does not yet contain sufficient provisions to significantly reduce the administrative burden on companies. In particular, the proposed rules on administration and documentation require considerable resources from companies and also jeopardize the competitiveness of German companies on the international stage.

A key proposal from the business community is the introduction of a permanent safe harbor system. The currently proposed CbCR (Country-by-Country Reporting) safe harbor is designed only as a temporary solution and requires revision. For example, the “once-out-always-out” principle permanently excludes companies that fail to meet the thresholds even once from the safe harbor. The federal government should take this as an opportunity to advocate internationally at the OECD for the permanent adoption of the safe harbor rules.

Elimination of Add-Back Taxation Is Necessary

The introduction of the global minimum tax sets the effective tax burden internationally at 15 percent. In this context, the existing add-back taxation represents an additional administrative burden and is no longer necessary. The BDI calls on the federal government to advocate at the EU level for a corresponding amendment to the Anti-Tax Avoidance Directive (ATAD). Such an adjustment would prevent double taxation and preserve the competitiveness of German companies. The “Simplified Corporate Tax” Expert Commission also supports this call.

Necessary Next Steps

The present draft for discussion still requires significant adjustments to create a minimum tax law that is also practicable for companies in Germany. Further simplifications and clarifications are necessary to reduce the administrative burden while protecting the competitiveness of the German economy in a global context. In particular, the following points must be incorporated into the further legislative process:

• Introduction of a permanent, workable safe-harbor system that provides companies with the necessary legal certainty
• Repeal of the “Hinzurechnungsbesteuerung” (add-back taxation) to avoid unnecessary administrative double burdens
• Clarification of key terms and consideration of existing reporting systems to ease the burden on companies

The BDI will continue its dialogue with policymakers to ensure that German companies remain internationally competitive in the future and are not disadvantaged by avoidable administrative burdens.