Businesses fret over delayed electronic income tax system

Businesses fret over delayed electronic income tax system
Photo: DPA
Germany fiscal officials are citing “technical delays” for postponing the nationwide introduction of an electronic income tax tracking system starting in 2012. The delay has some businesses grumbling.

Uncertainty over the new system – an electronic version of the paper Lohnsteuerkarte document employers have used since 1925 to track their employees’ wages and tax obligations – is unlikely to affect the day-to-day lives of regular working stiffs.

But it could turn record keeping at German businesses into chaos as managers figure out how best to collect tax data during the transition period that has now been extended by several months, the Handelsblatt newspaper reported on Tuesday.

The introduction of the new system, which was supposed to happen this year, has already been pushed back by the Financial Ministry several times due to technical problems.

“Businesses and employers need predictability so they can pay the income tax on January 1,” Isabel Klocke of the Federal Taxpayers Association told Handelsblatt.

Once the new system is introduced, all workers will get a new electronic record known by the clunky German abbreviation ElStAM for Elektronische Lohnsteuerabzugsmerkmale. It is supposed to mean less paperwork for everyone involved. It will also allow them to more easily control what personal information is released to employers. It will, for instance, be possible for workers to block the release of information about their new marriage.

Already, some Germans have been receiving notification of their new ElStAMs, but not without difficulties arising. In some cases married couples were registered in the wrong tax bracket among other problems, Handelsblatt reported.

“Taxpayers should check the information closely,” Reiner Holznagel a vice president at the Federal Taxpayers Association told the newspaper.

The colourful paper Lohnsteuerkarte has a long history in Germany that stretches back to 1925. But as Germany’s population has grown and business complexity has increased it has become an anachronism that many see as inefficient and out of step with changing times.

The Local/mdm

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