German Christian Democrats Call For Strict Internet Taxation

[Berlin, GERMANY] According to the Minister of Finance in Hessen, Karlheinz
Weimar of the Christian Democratic Union, taxes for copyrights should also
apply to the Internet. Weimar told the Reuters news agency over the weekend
that it is not understandable how taxes can be charged when software or
videos are sold at a shop counter, but not when a comparable transaction
takes place over the Internet. Germany’s Federal Audit Court apparently
estimates that Germany is losing 20 billion Marks worth of taxes every year
due to outdated tax laws and a lack of international regulations. This
situation must be remedied immediately,
says Weimar.

Weimar does not foresee any competitive disadvantage for Germany’s Internet
branch, however. “Our Internet economy doesn’t require any subsidies,”
declares the Minister of Finance. He demands that the Federal Government
comes to appropriate agreements both on the EU level and internationally as
quickly as possible. The question must also be settled as to if and in what
way a server selling software over the Internet is an undertaking subject to
taxation. Levying a tax on profits is only possible if a precise definition
of an Internet business exists. This would admittedly only apply to
businesses operating from within the country. Internet shops conducting
their business over a server in the Bahamas, for example, would instead be
subject to international regulations from the European Union and on the
level of the OECD.

In the case of sales tax, Weimar finds it conceivable that one could employ
search engines to track down Web sites involved in taxable activities, or
analyzers to filter out cases relevant to taxation. Weimar also thinks that
it is worth discussing whether the investigation into tax losses on the
Internet should start where payments are actually carried out. He says that
an agreement must be reached on a global level as to which transactions
would be taxed where.

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