Attitude "lacks any logic": BDI boss Kempf criticizes Scholz heavily

Saturday 12th December 2020

Attitude "lacks any logic"
BDI boss Kempf strongly criticizes Scholz

German industry has long insisted on more tax relief during the corona pandemic. Companies see extended loss carry-back as the best tool for this. BDI boss Dieter Kempf is now tackling Finance Minister Scholz tough in the debate.

The President of the Federal Association of German Industry (BDI), Dieter Kempf, has called for further tax relief for companies in the Corona crisis. "An extension of the tax loss carry-back would now be the best instrument for companies that suffer losses," said Kempf. This is especially true for those who have been successful in the past two years. "We always talk elsewhere about the risk of bankruptcy. The easiest way to avoid this would be to support companies with liquidity." SPD finance minister Olaf Scholz had to move.

Business associations have long been calling for the tax loss carry-back to be expanded. Companies should be able to offset crisis-related losses against profits from previous years for tax purposes more than was previously possible. In the black-red coalition, however, an expansion is controversial. Economics Minister Peter Altmaier of the CDU had on Friday in the event of a hard lockdown, wanting to advise on the federal and state governments, an expansion of corona aid for companies. Altmaier is also committed to expanding the tax loss carry-back.

Kempf said the argument that if the tax loss carry-back were expanded, then low- and middle-income earners would pay tax cuts for the economy, was not convincing. "When the liquidity crisis is over, more companies will pay more taxes again." In contrast to the support measures such as the November aid or the bridging aid, the offices do not have to check very much, as the annual financial statements are usually audited, said the BDI boss. "The fact that the Federal Ministry of Finance is resisting the expansion of the tax loss carry-back lacks any logic."

Sharpest decline in production since the euro crisis

The industry president described the overall situation in industry as bad. The decline in production this year by ten percent is the most severe since 2009 and the euro crisis. "In many industries we will still experience very dramatic situations. One or the other simply lacks the strength to bridge further time in the face of falling sales or torn supply chains."

The options for tax loss offsetting were expanded with the Second Corona Tax Aid Act from the end of June. The tax loss carryforward was increased for 2020 and 2021 to five million and ten million euros respectively (with joint assessment). In addition, a mechanism was introduced to make the loss carryforward for 2020 immediately financially effective with the 2019 tax return.