French Corporate Tax Revenues Show Steep Decline

by Ulrika Lomas, Tax-News.com, Brussels

21 August 2009

Surprise news that France has come out of recession has been dented after it was revealed that there has been a steep decline in corporation tax revenues.

Figures published on Tuesday show the corporation tax take between January and June was EUR5.6bn – a mere 20% of the revenues achieved in the same period in 2008. The figures have cast doubt on government forecasts of raising between EUR14.4bn and EUR19.4bn from the tax in the second half of the year.

Total corporation tax receipts for 2008 were EUR49.2bn. Yet despite – or perhaps because of – stimulus measures that were introduced to assist businesses through the recession, the government is expecting far lower total revenues from the tax of EUR20bn-25bn for 2009.

A government source said revenues should improve over July to December, claiming that part of the reason for the drop in the first six months was due to EUR16.7bn being refunded to companies who had overpaid tax in 2008. The stimulus measures are also held partly responsible for having pushed these repayments through quickly in order to assist companies through the financial crisis.

Other figures produced last week have put the national deficit at end-June at EUR86.6bn, compared with EUR32.8bn in 2008. The government has forecast that the deficit for 2009 and 2010 will be between 7% and 7.5% of GDP.

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