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French Employers Non-Plussed By SME Tax Cut Plan

by Ulrika Lomas, Tax-News.com, Brussels

26 August 2016


The French Government intends to introduce a partial corporate tax cut in its Budget for 2017, according to Prime Minister Manuel Valls, although the proposal has been criticized as a complex "half measure" by France's main employers' federation.

In a recent interview with weekly news magazine L'Express, Valls revealed that an intermediate rate of corporate tax will be introduced as the Government continues with its attempts to relieve the tax burden, particularly on small- and medium-sized enterprises.

The headline rate of corporate tax in France is currently 33.33 percent. However, qualifying SMEs are entitled to pay a reduced rate of 15 percent on the first EUR38,120 (USD43,000) of profits. Under the plan disclosed by Valls, a 28 percent rate would apply after this threshold, although he did not specify where any upper income threshold would fall for the new corporate tax bracket.

While the Government has been congratulated by businesses for recognizing the need to reduce corporate tax, Medef, France's largest employers' association, slammed the proposal as a "complex half-measure" that will do little to relieve the tax burden.

Medef suggested that the added complexity of a third corporate tax bracket would probably outweigh the benefit of reduced taxes for companies qualifying for the tax cut.

Commenting on the proposal, Geoffroy Roux de Bezieux, Executive Vice President of Medef, said that the Government's willingness to tackle France's high tax burden - "a concern for companies and European partners" - is "commendable." However, he contended that the measure announced by Valls "is too complex and not up to the challenge."

"Companies need clear signals and no new complexities," he added.

TAGS: tax | business | corporation tax | tax rates | France

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