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Falling VAT Widens French Budget Gap

10 June 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

The French Finance Ministry has published an update on the country's budgetary situation as at April 30, 2013, highlighting the fact that weak tax revenue levels have impacted on the general budget deficit.

The general budget deficit stood at – EUR66.8bn (- USD88.3bn) as at the end of April 2013, compared to - EUR59.9bn at the end of April 2012. According to the Finance Ministry, the EUR6.9bn widening of the deficit is attributable not only to various exceptional outlays, including payments to the European Stability Mechanism (EUR3.3bn) and to the European Investment Bank (EUR1.6bn), but is also due to lower than anticipated fiscal revenues.

As at April 30, 2013, general budget revenues (net of reimbursements and rebates) amounted to around EUR90.8bn. This compares to EUR91bn the same time last year. Although net fiscal income has therefore remained stable compared to last year, the level is slightly below the figure forecast in the Government's Stability Program. A recorded rise in income tax revenues was offset by a shortfall of revenues from net value-added tax (VAT) and from the domestic tax on the consumption of petroleum products (TICPE).

Lower consumption tax revenues are attributable to weak economic activity experienced at the beginning of the year.

The Finance Ministry's statistics show that revenue derived from income tax was up 11 percent at the end of April, compared to the same period in 2012, while income from VAT, the main source of state revenue, had fallen by 2.3 percent, corporate tax revenue had fallen by 5.8 percent, and TICPE revenues had dropped by 6.1 percent.

Although the Government had planned to reduce the public deficit to 3 percent of gross domestic in 2013, it has been forced to revise upwards this target figure to 3.7 percent, based on limited growth of 0.1 percent.


Section 240A of the Tax Administration Act, 2011 (as amended) requires that all tax practitioners register with a recognized controlling body before 1 July 2013. It is a criminal offense to not register with both a recognized controlling body and SARS.


The Act requires that a minimum academic and practical requirments be set to register with a controlling body. Click here for the minimum requirements of SAIT.

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