Global

Details

  • Service: Tax, International Corporate Tax, Mergers & Acquisitions, Global Compliance Management Services
  • Type: Regulatory update
  • Date: 7/11/2012

France - Focus on corporate tax changes in government’s proposal 

July 11:   The French government recently unveiled a second amended finance bill for 2012 that contains provisions affecting corporations.

If enacted, provisions affecting oil and gas companies and financial services companies would:


  • Implement a 4% exceptional tax applicable to inventories of oil companies
  • Increase the “systematic risk tax” by imposing a “special contribution” based on the amount of the systematic risk tax paid on 30 April 2012
  • Increase the financial transaction tax rate from 0.1% to 0.2% (scheduled to be effective 1 August 2012)

Other general corporate tax items would:


  • Establish a 3% tax on dividends distributions made by companies
  • Implement an early instalment payment rule for “exceptional corporate tax contributions”
  • Prevent transfers of profits to low tax jurisdictions (i.e., countries that benefit from a privileged tax regime)
  • Restrict the use of loss carryforwards
  • Limit the use of certain short-term capital losses
  • Prohibit the tax deductibility of financial debt-waivers

Concerning value added tax (VAT), the government’s tax proposal package includes a provision to repeal the 1.6% increase of the standard VAT rate which is scheduled to be effective 1 October 2012, thereby returning the standard VAT rate to 19.6%.


Other measures in the proposal would affect employment-related taxation, such as:


  • Repeal of certain tax incentives related to investments used by corporations to finance their social contributions
  • Increase the rate of tax on employee benefits and retirement plans (Forfait social) from 8% to 20%
  • Repeal tax and social contribution incentives applicable to overtime payments

Read a July 2012 report [PDF 310 KB] prepared by STC Partners*: Second Amended Finance Law for 2012


* STC Partners is a French law sublicensee of KPMG International in tax.




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