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French Government Sets Out Stall For Radical Reforms

by Ulrika Lomas,, Brussels

10 April 2015

In response to recent indicators that the French economy is flagging, and a poor showing by his party in local elections, the Prime Minister of France, Manuel Valls, has announced a far-reaching program of tax reforms and incentives.

His stated aims are to revitalize business and encourage employment. First, an exceptional tax deduction for business investment: investment previously deductible at 100 percent will be eligible for a deduction of 140 percent. This applies to all expenditure from April 15, 2015 and across all business sectors.

To stimulate employment, social security payments will be reduced. From January 1, 2016, employers' contributions in respect of employees paid at minimum wage will be abolished and will be cut for those paid at up to 3.5 times the minimum wage. Contributions by the self-employed are also to be cut. Certain contributions currently payable by corporations will also be phased out by 2017.

The rate of corporation tax will be progressively reduced, to reach 28 percent by 2020. Many other "small taxes giving little return" will be abolished and the system for businesses generally simplified.

The Government will aim also to reduce personal income tax for employees, particularly the lower-paid.

Other measures include a program of public works and extension to the telecoms networks, an increase in the funds available for interest-free loans for home improvements and a contribution of up to EUR10,000 (USD9,400) for the purchase of an electric or hybrid car.

TAGS: tax | investment | business | tax incentives | public sector | corporation tax | social economy | tax rates | social security | France | tax reform | telecoms | individual income tax | business investment

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