BERLIN, April 8: Germany plans to cut corporate income tax rates by as much as 50 per cent when launching one of the country’s key reforms — the overhaul of its unwieldy corporate tax system, according to German media reports. Germany’s ruling coalition is set to spend the next two months examining plans for an overhaul of corporate taxes and has pledged to reform the system by Jan. 1, 2008.

Weekly magazine Der Spiegel said the Finance ministry planned to reduce the overall tax paid by joint stock companies to 25 per cent from currently just over 38 per cent, citing experts within the ministry. This would mean corporate income tax would be cut in half to 12 per cent, the magazine said in an article to be published on Monday.

Daily Die Welt reported in its Saturday edition that corporate income tax could be slashed to 15 per cent to push the overall tax burden for joint stock companies below 30 per cent, citing sources close to Finance Minister Peer Steinbrueck.

The finance ministry said the reports were speculation.

The ministry will only be able to come up with first assessments in June, ministry’s spokesman Torsten Albig said.

Steinbrueck himself declined to comment at a news conference in Vienna on the sidelines of a meeting of European Union finance ministers and central bank governors. He said he would not be making any public comment on the work underway on the corporate tax plans for the next two and a half months.

Simplifying the dizzying array of intertwined federal, state and local taxes faced by companies in Germany has been a cherished goal for politicians on all sides. But attempts at reform have generally ended in half hearted compromise or despair for whoever attempted the task.

The disparity in corporate tax rates within the European Union has also been a topic at a three-day meeting in Vienna which began on Friday.

Steinbrueck earlier expressed irritation with a recent campaign led by his Austrian counterpart Karl-Heinz Grasser to highlight the attractiveness of Austria’s relatively low company tax rates compared with Germany’s higher burden.

Germany was facing very ambitious and aggressive enticement from Austria, Steinbrueck said in an interview with Vienna’s Der Standard newspaper published on Friday.—Reuters