Medef Slams French 2011 Finance Bill

by Ulrika Lomas, Tax-News.com, Brussels

16 December 2010

During a recent national conference of industrialists, the French employers’ federation Medef fiercely criticized the government’s 2011 finance bill, warning that spectacular errors had been made as regards changes to ‘extraordinarily promising’ fiscal mechanisms currently benefiting businesses in France.

Alluding to the fact that industry in France now only represents 14% of value added, as compared to 21% in Germany, the employers’ federation praised the considerable efforts made by the government over the past few years to reindustrialise the country, noting that these have indeed been beneficial. Small- and medium-sized companies (SMEs) in France are struggling to grow, Medef warned, often as a result of under capitalization.

Yet despite acknowledging the plight of SMEs, the government has reneged on its promises to support industry, Medef declared, underlining the fact that poor choices have been made in the passage of the 2011 finance bill through parliament.

Here, Medef specifically referred to the decision to reduce the current ‘ISF PME’ provision enabling individuals to reduce part of their wealth tax bill by investing in SMEs. This very mechanism, Medef argued, successfully responded to an actual identified need.

According to Medef, the decision to amend certain provisions pertaining to the research tax credit (le crédit impôt recherche) was a clear mistake. Given the fact that France is several years behind other countries in terms of research and innovation, this tax break is an invaluable mechanism, the federation explained. The introduction of a so-called ‘Google tax’ levied on online advertising is yet another measure which will only serve to severely penalise SMEs in France, Medef added.

Medef pointed out that the clear difference between France and Germany is quite simply the burden of taxation and social charges imposed on businesses. Whereas Germany has endeavoured over the course of the last few years to reduce the tax burden on its companies, this burden has increased in France.

In its closing statement, Medef underlined the fact that the country’s 2011 finance law will merely result in less equality of opportunity for businesses in France, and will therefore severely hinder SMEs in particular.

Medef urged the government to rethink corporate taxation in France.

Recommended