Monday, October 5, 2020
French Minister of Finance Bruno Le Maire presented the 2021 Finance Bill to parliament on September 28, 2020, which includes provisions to reduced taxes on production and plans to reduce the corporate tax rate next year.
A statement released alongside the Finance Bill confirmed the Government's plans to lower the rate of corporate tax to 25 percent by 2022. It said the rate will drop to 27.5 percent for large companies and to 26.5 percent for companies with a turnover of less than EUR250m (USD293m) from 2021. The reduced rate of 15 percent is to be maintained for SMEs, it said.
As announced by the Government in early September, the 2021 Finance Bill will halve the burden of three local level taxes. These are the company value-added contribution (CVAE) and the businesses property contribution (CFE), which collectively make up the Territorial Economic Contribution (CET), and also the property tax on buildings (TFPB).
Currently, companies whose CET liability is greater than three percent of their added value can apply for CFE tax relief. The Finance Bill reduces the cap to two percent.
The Finance Bill also includes proposals to introduce a VAT group regime, enabling groups of companies to be represented by a single entity for VAT purposes and disregard (for VAT purposes) transactions between members.
Additionally, a further seven low-yield taxes will be abolished by the 2021 Finance Bill, following the repeal of 26 such taxes in 2019 and 20 in 2020.