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France Begins Tax Break Purge

Friday, 19 July 2013   (0 Comments)
Posted by: Author: Ulrika Lomas
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Author: Ulrika Lomas

The French Government has unveiled a raft of measures aimed at simplifying administrative procedures for both companies and individuals in France, and at reducing state spending on tax breaks. The proposals are designed to reduce the public deficit by around EUR3bn (USD3.9bn) next year.

Intending to cut spending on tax shelters (les niches fiscales), the Government plans to reduce the income tax shelter benefiting families, the "family quotient," to progressively reduce subsidies accorded for the use of first generation biofuels derived from plant products, and to reform tax perks currently benefiting listed real estate investment companies in France. Furthermore, the Government intends to lower tax rebates granted to farmers for using off-road diesel, and to cut tax breaks available to French overseas departments and territories, including value-added tax exemptions.

The Government aims to dramatically cut red tape, thereby reducing administrative costs for businesses, notably by simplifying the research tax credit (CIR), and by ensuring that more companies subject to corporation tax (IS) in France are required to declare and pay their tax bills electronically.

In addition, the Government plans to establish a relationship of trust between the Tax Administration and businesses in France. Consequently, rather than tax audits being carried out post-declaration, the Tax Administration will carry out annual reviews, considering tax options and obligations with businesses prior to the submission of a corporate tax declaration. This will result in a binding opinion, enhancing legal certainty for firms.

Finally, the Government aims to facilitate customs procedures, by offering in future a secure service for taxpayers to declare and pay various taxes and duties online, including levies due on alcohol, on alcoholic drinks, on sugary beverages, and on flour and cereal.

A bill providing for some of the measures is due to be presented in September. Further cost cutting initiatives are currently being considered.



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.

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