German president criticizes tax evasion by digital companies

BERLIN, March 12 (Xinhua) -- Digital companies should not be allowed to evade tax by routing their profits through tax havens, German President Frank-Walter Steinmeier said here on Tuesday in a speech marking the 100th anniversary of the International Labor Organization (ILO).

Speaking at a ceremony marking the centenary event, Steinmeier said "if we want to collect the dividend from digitization, we need to invest in time to prepare people for the labor market of the future. And this can only be financed if digital companies do not evade their tax liability."

In order to finance the digital transition and help people prepare, "higher investments" would be needed in education, good working conditions and active labor-market policies, Steinmeier added.

Last year, the European Commission presented a proposal to introduce a special corporate income tax for digital companies in the European Union (EU) member states.

"Internet giants like Google, Facebook and Amazon are making huge profits, but so far pay hardly any taxes in Europe," said German Federal Development Minister Gerd Mueller at the beginning of this year.

At a meeting of EU finance ministers on Tuesday, the Commission's proposal to introduce an EU-wide digital tax was rejected. Despite the failed vote, several EU member states including France, Spain and Austria have recently introduced some form of national digital tax.

The German government, however, would work towards an international agreement and is hoping that the Organization for Economic Co-operation and Development (OECD) countries, including the United States, will agree on a minimum tax for digital companies by 2020, Germany's Federal Minister of Finance Olaf Scholz told the German newspaper Spiegel in an interview.