THE FRENCH SOCIALIST GOVERNMENT has been forced into an embarrassing U-turn over its controversial profits tax, just two weeks after proposing it in its 2014 Finance Bill.
It comes as French manufacturers claimed that it would unfairly penalise them in the global marketplace.
The 1% operating profits levy – based on EBITDA – was proposed on the 25 September. It was designed to help bring down the French deficit, currently 95.1% of GDP – one of the highest within the eurozone countries. France’s overall tax burden, 46.1% of GDP, is among the highest in the developed world.
Finance minister Pierre Moscovici has instead confirmed the government will seek to raise the existing corporation tax rate.
Earlier this year, the European Commission gave France an additional two years to bring its deficit to below the 3% below GDP target for Euro-currency countries.
Business service company TMF Group’s global head of tax Richard Asquith said: “The new tax hit a wall of protest as it was seen as hurting France’s global prospects. It is not yet clear if a rise in the existing corporation tax will be enough, or whether more spending cuts will be required.”
The current business rates system is over-complex and reform is needed, but reforms should focus first of all on simplifying the appeals process, particularly for businesses which are subject to business rates exemption
The CIoT has called on the government to rethink its approach to ensuring online sellers pay the correct amount of VAT.
Jane Ellison to serve as 'tax minister' following ministerial responsibilities for public health. David Gauke become chief secretary to the Treasury
Head of editorial Kevin Reed discusses the accountants in the new cabinet; the FRC's report into audit market concentration; and the Top 40 International Networks Survey 2016