The Finance Ministry of Germany plans to introduce a new law to tax businesses for internet use by employees where the use is for personal purposes. The new regulation is being heavily criticised in Germany as being unenforceable and a step backwards in encouraging use of the internet.

However, the tax is not completely new. Rather, it is an extension of an existing law that applies to company benefits such as the free use of a company’s telephone for personal calls.

Carsten Meincke, a spokesman for AOL Europe, said:

“It’s just another instance of the typical German need to try and regulate everything… It’s hideous how these small-minded ideas are thought up by state bureaucrats trying to earn an extra buck… It will be a big inhibitor to the evolution of the internet in Germany.”

The new regulation will not apply to companies with flat rate internet access – only to per minute access, so many companies will not be taxed. It also grants what amounts to a significant allowance of tax exempt personal surfing. Critics say the law is unworkable because it is often hard to draw the line between work related and non-work related internet use. Effective regulation, they suggest, could cost more than the revenue the tax would generate.

Under national law, the 16 states of Germany will have the power to overrule the new regulation, should it be introduced.

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