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)

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.