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The Internet as a big tax haven – an international problem

Präsident des Bundesrechnungshofes, Kay Scheller und sein Amtskollege aus Polen, Herr Krzystof Kwiatkowski

On 13 June 2018, Kay Scheller, the German SAI’s President, met in Krakow with his counterparts of Poland, Krzystof Kwiatkowski, and the Czech Republic, Miloslav Kala. The three heads of SAIs discussed audit work on long distance road construction and on the taxation of Internet services. They agreed to continue cooperation in these areas and explored possibilities for working together in the future.

Speaking to Polish media representatives, Mr Scheller expressed his thanks to Mr Kwiatkowski for the hospitality extended to him and pointed out that the three SAIs worked together very closely. "International cooperation among SAIs is not only nice to have because we learn from one another. It is a must have because many audit challenges have an international dimension and can only be effectively tackled internationally through coordinated initiatives in Europe".

Pressekonferenz mit Vertreteren polnischer Medien


Mr Scheller presented recent audit findings the German SAI had developed on federal long distance roads, energy transition and taxation of e-commerce. He stressed the fact that Germany also faced major challenges in these areas. "These three areas are of crucial importance to our citizens and our country. Citizens expect the government to manage and develop these areas efficiently, effectively and in a coordinated manner to bring about tangible and sustainable results. The federal long distance roads constitute central transport routes that are vital for prosperity and economic growth in Germany and Europe. The maintenance backlog that has built up over the past decades must finally be addressed. More investment is urgently needed. What is also needed, however, is an efficient and professional road management seen from an overall national perspective and also placing focus on the European junctions and interchanges. For this reason, we have been monitoring the reorganization of the federal long distance road network in Germany – with the view to provide our pro-active and constructive advice to Parliament and the Federal Government over the entire project.


Krakau - Pressekonferenz

The three SAIs rely on international and concerted action to ensure taxation of sales over the Internet. "The Internet is a billion-dollar market and growth engine that must not remain a tax haven hiding tax revenue forgone amounting to millions of euros. This is a matter where our tax authorities must join forces to develop rigorous frameworks and ICT instruments to stop non-compliant businesses from evading tax" the three heads of SAIs agreed. To this end, the three SAIs intend to continue sharing audit findings, refine joint initiatives and make the point for SAIs taking action at European level.

In the afternoon of 13 June 2018, the three heads of SAIs met with students from the Faculty of Law at Jagiellonian University in Krakow to discuss the role of SAIs in countries governed by the rule of law and the SAIs’ significance for democracy in a civil society.

Präsident Scheller - Rede Uni Krakau

In his speech, Mr Scheller stated that with their expertise, their objective attitude and their audit approaches SAIs help enhance public sector efficiency and effectiveness. In this way, they were able to build public confidence in the government. "The external audit function is an integral part of the separation of powers governing any democracy. External audit strengthens and complements a basic duty in a democracy: to account for public sector action. Public sector accountability paves the way for addressing shortcomings and initiating improvement. Modern governments need to reflect on their own actions and take onboard lessons learnt from errors made", Mr Scheller said. "The SAIs’ independence is an absolute prerequisite. It is the core and the foundation of the SAIs’ audit work, credibility and success."

He also stated that by publishing their audit findings, SAIs also wanted to live up to the aspirations and expectations of citizens to better understand administrative procedures and decisions and to learn how government action can become better, more efficient and more effective.

Sources of photos: SAIs of Poland (NIK) and Germany (BRH)

© 2018 Bundesrechnungshof