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Identification of government agencies and tax secrecy

Identification of government agencies

The total number of government bodies that generate revenues from the extractive industry in Germany stem directly from the cash flows that were defined for this first D-EITI report. No central recording of the relevant cash flows is possible, however, due to the federal structure of the administration in Germany. The following individual government agencies are responsible for:
  • Corporation tax: the responsible tax offices at the respective headquarters of the companies
  • Mining and extraction royalties: the responsible mining authorities of the Federal States in which the approved/licenced site is located
  • Trade tax: the municipalities in the territory of which the taxable operating facilities are located (no payment reconciliation)
  • Lease payments: The government agencies which generate revenues from extractive companies on the basis of individual contractual arrangements (no payment reconciliation)

IDENTIFICATION OF GOVERNMENT AGENCIES AND TAX SECRECY

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Managing tax secrecy

Both the EITI reporting and the payment reconciliation processes encompass tax data, viz. cash flows relating to corporation tax and trade tax, which are subject to tax secrecy pursuant to §§ 30 et seq. of the AO (German Tax Code, read more here The following aspects are particularly significant in the context of tax secrecy:

  1. In the course of the preparation of the EITI report, the cash flows reported by the companies and received by government agencies are prepared and disclosed. This also affects tax payments, i.e. data that is subject to tax secrecy. This usage of tax-relevant data is only permissible if the taxpayer, i.e. the respective company, expressly agrees (§ 30(4), No. 3 of the AO). The data collection templates ensure that this consent is obtained from each company for the purpose of publishing the data in the context of EITI reporting. 
  2. As part of the payment reconciliation to be carried out, the tax payments reported by a company must be reconciled with the data reported by the tax authorities, which are the recipients of the payments. Due to tax secrecy, the respective financial authority may not make this data available for the purposes of payment reconciliation; this requires the taxpayer’s express authorisation for the Independent Administrator to act.
The form and the content of this power of attorney were examined by the competent departments of the Federal Ministry of Finance and the Federal States and were also approved by a joint Federal-State committee. When the approval of the MSG and the mining authorities had been given, the approved power of attorney for submission to the respective tax authorities was also used as a model for a corresponding power of attorney for submission to the responsible mining authorities for the purpose of reconciling mining and extraction royalties.

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Glossar

In Federal States in which legislation does not include an excavation law and the State-level Nature Conservation Law does not apply to the extraction of non-energetic, ground-based natural resources in the context of dry excavations, this type of natural resource extraction falls within the scope of the relevant state building regulations.

Legal limitations also exist: State building regulations apply to the excavation of solid rock (limestone, basalt, etc.), for example, in quarries with an area of up to 10 hectares (ha) in which no blasting is carried out. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable.
In Bavaria and North Rhine-Westphalia, the above-ground excavation of non-energetic, ground-based natural resources in the context of dry excavations is determined at state level by the existing excavation laws (AbgrG). For the excavation of solid rock (limestone, basalt, etc.) in quarries where blasting does not occur, the AbgrG applies to sites with an area of up to 10 ha. In the event that this area is exceeded, or if water bodies are formed after completion of the extraction operations, the German Federal Immission Control Act (BImSchG) and/or Water Resources Act (WHG) are applicable. In the other Federal States, this type of natural resources extraction is regulated by the respective state building regulations or by the state-level nature conservation laws.

In general, the AbgrG applies to those raw materials the excavation of which is not directly subject to mining law or the mining authorities. These raw materials include (in particular) gravel, sand, clay, loam, limestone, dolomite and other rocks, bog mud and clays. However, the jurisdiction between AbgrG and mining law can vary from case to case in the case of certain raw materials, such as quartz gravels. The requested authority must always verify its own jurisdiction in each case. The AbgrG also encompasses surface area usage and the subsequent rehabilitation of the area.
The German Federal Immission Control Act (BImSchG) is the most important and practice-relevant law in the field of environmental law. It constitutes the basis for the approval of industrial and commercial installations. In the natural resources extraction industry, quarrying companies must have approval to extract stones and earth. Every quarrying area of 10 hectares or more must undergo a full approval procedure, including public participation and UVP (environmental impact assessment). A more simplified approval procedure is used for quarrying areas of less than 10 hectares.

The sphere of responsibility for the legal immission control approval procedure is fully specified in the Immission Control Acts of the Federal States. The Federal States are tasked with the administrative enforcement of the approval procedure. Each individual state’s Environment Ministry – the highest local immission protection authority – usually bears the responsibility for this procedure. Subordinate authorities include regional councils, district authorities and lower-level administrative authorities. Administrative jurisdiction generally lies with the lower-level administrative authorities.
The GDP measures the value of goods and services produced domestically (creation of value) within a given period (quarter, year). The Federal Office of Statistics calculates the GDP as follows: production value minus intermediate consumption = the gross value added; plus taxes on products and minus subsidies = GDP
The gross value added is calculated by deducting intermediate consumption from the production values, so it only includes the value added created during the production process. The gross value added is valued at manufacturing prices, i.e. without the taxes due (product taxes), but including the product subsidies received.

During the transition from gross value added (at manufacturing prices) to GDP, the net taxes (product taxes less product subsidies) are added globally to arrive at an assessment of the GDP at market prices’. Source: Destatis
The planning approval procedure under mining law is used for the approval procedure of a general operating plan for projects which require an environmental impact assessment (§§ 52(2a), in conjunction with 57 a of the BBergG).
There are different definitions and methodological approaches at the international as well as at the national level as to what subsidies are and how they are calculated. According to the definition of the German government’s subsidy report, this report considers federal subsidies for private companies and economic sectors (ie grants as cash payments and tax breaks as special tax exemptions) which are relevant to the budget. Subsidies at the federal level can be viewed via the subsidy reports of the federal states (see Appendix 5 of the German government subsidy report).
In compliance with § 68(1), Water Resources Act (WHG), the excavation of landowners’ natural resources such as gravel, sand, marl, clay, loam, peat and stone in wet extraction operations requires a planning approval procedure. The reason for this is that groundwater is exposed in wet extraction, resulting in above-ground water. The planning approval procedure is implemented by lower-level water authorities.

The procedural steps of the planning approval procedure are governed by the general provisions of §§ 72 to 78 of the Administrative Procedures Act (VerwVfG). Within the meaning of § 68(3), nos. 1 and 2 of the WHG, the plan may only be established or approved if an impairment of the common good is not to be expected and other requirements of the WHG as well as other public-law provisions are fulfilled.