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Germans: No Tax Break for Bribes

November 10, 1998

BONN, Germany (AP) _ Germany is set to outlaw tax deductions for bribes paid to foreign officials, falling in line with a U.S.-led drive to fight corruption and promote fair competition.

The change is part of proposed tax reforms presented Monday by the new center-left government of Chancellor Gerhard Schroeder. Parliament is expected to approve the measure before the end of the year.

Currently, kickbacks paid by German companies abroad or at home to win contracts are tax deductible as legitimate business expenses unless the person who made the payout is found out and convicted of bribery. In practice, that rarely happens.

The new rule would apply only to bribes to foreign public officials, not to private individuals. But the change helps combat corruption even with its limited scope, the government says.

Kickbacks inside Germany would also no longer be deductible.

The crackdown follows an agreement signed by Germany and other major industrial nations in Paris last December to help root out bribery in international business. The United States was a driving force behind several years of tough negotiations over the pact.

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