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French Assembly Passes Tax Evasion Bill

by Ulrika Lomas,, Brussels

11 November 2013

The French National Assembly has definitively adopted the Government's anti-tax evasion and major economic and financial crime bill. The legislation was passed by 358 votes to 198.

"Profoundly enriched" during the course of the parliamentary debate, the bill is designed to considerably strengthen the capacities of the country's tax and customs administrations, as well as the police and the judiciary in their fight against tax fraudsters, while at the same time toughening sanctions for those who have evaded their tax obligations in France to the detriment of honest French taxpayers. Furthermore, the text strengthens coordination between the financial and judicial administrations, and increases the transparency of the enforcement action undertaken by the tax administration.

Underscoring that the legislation constitutes "a new stage" in the Government's "determined fight against tax evasion" and the recovery of the public finances, French Finance Minister Pierre Moscovici and Budget Minister Bernard Cazeneuve welcomed the adoption of the bill. The Ministers highlighted the fact that a euro recovered from efforts to combat tax evasion is a euro less in tax.

Alluding to the fact that over 4,000 voluntary declarations have been submitted to the French tax administration, since publication of the June 21 circular detailing the conditions of the tax regularization procedure, the Finance Ministers stated that the results are clear evidence that the Government's strategy is bearing fruit. Indeed, the Government is now confident that around EUR2bn (USD2.6bn) in additional revenues will flow to the 2014 Budget from the fight against tax evasion.

According to the Finance Ministry, the Government has taken almost 60 measures aimed at clamping down on tax evasion and financial crime in a year and a half. Anti-tax evasion provisions have been included in the summer 2012 and December 2012 supplementary finance laws, as well as in the latest anti-tax evasion bill.

The initial text of the Government's anti-tax evasion bill extends the competencies of the BNRDF or so-called "tax police" to include complex cases of tax evasion as well as tax evasion involving bank accounts or contracts held abroad. Further, the provisions create an "aggravating circumstance" for the most serious types of fraud, and enable investigators to use "special" investigative techniques.

In addition, the bill toughens correctional sanctions applied for aggravated cases of tax evasion . Sanctions include a seven-year prison sentence and EUR2m fine. The tax administration will also be authorized to make use of any information received, irrespective of the origin of that information.

Among the multitude of amendments adopted by lawmakers during the bill's passage through parliament are provisions for "repentant" taxpayers, which include plans to halve the length of the custodial sentence incurred by a perpetrator of or accomplice to tax evasion if, having alerted the administrative or judicial authorities, other perpetrators and accomplices are identified.

As part of efforts to tighten reporting obligations for tax controls and to improve efficiency, lawmakers adopted plans to increase the fine for the non-declaration of a trust, from 5 percent to 12.5 percent of assets, and agreed to extend the reporting obligations of trust administrators.

Finally, the Government intends to strengthen the fight against international tax evasion by extending France's so-called "black list" of states deemed "uncooperative" in tax matters (ETNC) to include those which, from January 1, 2016, have not agreed to an automatic exchange of information.

TAGS: compliance | Finance | tax | tax compliance | tax avoidance | law | corporation tax | enforcement | legislation | tax rates | France | individual income tax | Tax | Tax Evasion

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