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France Mulls "Simpler" Withholding Tax On Income

by Ulrika Lomas, Tax-News.com, Brussels

09 December 2013


France will consider the idea of imposing a withholding tax on income at source, within the framework of plans to reform taxation in France, French Prime Minister Jean-Marc Ayrault has revealed.

In an interview with RTL, Prime Minister Ayrault insisted that levying a withholding tax on income at source would certainly be simpler, and therefore conceded that the idea merits further reflection.

Reiterating that an overhaul of taxation is vital, given that the French tax system has simply become incomprehensible, Ayrault underscored the importance of radically simplifying the regime.

Furthermore, Ayrault cited two examples of "inefficient, even unjust taxes" in France. Firstly, he alluded to corporation tax, and argued that small- and medium-sized enterprises in France currently bear a high tax burden, while large corporations avoid paying tax, sometimes even completely.

The French Minister also referred to the example of the prime pour l'emploi tax credit, intended to benefit low-income employees in France. Individuals make the effort to find a job, they work hard and pay the general social contribution (CSG) straight away, yet have to wait one year before receiving the state aid, Ayrault pointed out, stressing once again that a reform of taxation is "indispensable."

Concluding, Prime Minister Ayrault emphasized that the four guiding principles for the tax reform are simplification, stability, employment, and, above all, justice, especially given that low- and middle-income earners in France currently pay the most. There will not, however, be an overall increase in taxation, Ayrault underlined, alluding to Government plans to reduce public spending to the tune of EUR50bn (USD68.3bn) by the end of its five-year term in office.

TAGS: tax | tax avoidance | employees | corporation tax | tax credits | withholding tax | France | tax breaks | tax reform | individual income tax

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