BERLIN, July 18 /Xinhua-PRNewswire/ -- The German government agreed to a reform of company taxation that includes a strong reduction in the corporate income tax. The reform goes into effect on January 1st, 2008. It plans a reduction of the real total tax burden (corporate income tax plus trade tax) for incorporated companies from an average of 38.7% to an average of 29.8%. The corporate income tax is to be reduced from 25% to 15%. German Finance Minister Peer Steinbruck said that the change will noticeably increase Germany's attractiveness for investors. It is estimated that the tax package means a savings of EUR6.5 billion for businesses.
"The reform of company taxation is of course good news for Chinese investors in Germany", said Chinese businessman Jiang Ziqiang. Mr. Jiang took over the insolvent factory Welz Gas Cylinder in April of 2003. This was the first time that a private Chinese company had taken over a German business. Since then, the company's annual sales have increased. Mr. Jiang is very satisfied with the German investment landscape. "After the reform of company taxation the investment landscape will become even more attractive. I am assuming that more Chinese investors will come to Germany. It would be a good choice," noted Mr. Jiang.
Mr. Cui Shihua, First Secretary from the Economics and Trade Division in the Chinese Embassy in Berlin, believes that the reform is not only good for German companies but also good for foreign businesses that would like to invest in Germany because they would be relieved from tax burdens. This change therefore makes Germany an increasingly attractive investment location for Chinese investors.
Patrick von Wrede, China expert with Invest in Germany, points out the reform's far-reaching benefits for Chinese companies and the German economy: "With this reduction in company taxation, we expect to see more and more Chinese companies come to Germany not only to distribute but also to actively produce and develop their products here, thereby taking advantage of the ‘Made in Germany' quality seal. This is a tremendous asset for Chinese companies competing on the domestic markets back home as well as for those
companies wishing to build up a truly global brand."
The renowned American law firm Squire, Sanders, and Dempsey L.L.P. recently announced that in a survey among large investors and businesses from China, Germany would be the first choice for an investment in Europe. Chinese investors see that they open the gate to the world's largest single market, the European Union, with an entry into the German market. The Chinese Embassy in Germany reports that through the end of 2006 a total of US$219 million was invested by Chinese enterprises in Germany. Furthermore, in the last two years investment activity in Germany has been noticeably strengthened.
This is expected to continue. The consultancy Pricewaterhouse Coopers (PwC) explained that in the next ten years, Chinese investors are expected to invest EUR2 billion into the German economy and it is estimated that through this Chinese investment, 10,000 jobs will be created in Germany.
Invest in Germany is the official investment promotion agency of Germany. Its mandate is to assist and advise international companies about investment opportunities in Germany. Invest in Germany provides comprehensive support from site selection to the implementation of investment decisions.
