The French National Assembly has recently adopted during a first reading the country’s 2012 supplementary finance bill, which constitutes a key stage in the government’s overall plan to strengthen the fight against tax fraud and tax optimization.
The third supplementary finance bill for 2012 was adopted by 295 votes to 230.
Commenting on the vote, Socialist deputy Alain Muet stressed that the government’s “coherent and subtle policy” will enable the country to swiftly exit the debt spiral and reduce unemployment.
In contrast, Union for a Popular Movement deputy Hervé Mariton insisted that if there is any coherence between the summer and autumn bills and the 2013 finance bill it is to be found in the fear that the government has generated. The summer bill, providing for additional taxes on businesses in France of over EUR2bn (USD2.6bn) in 2012 and EUR5bn in 2013, has raised fear among corporations, while the 2013 finance bill has increased their tax burden by a further EUR10bn, Mariton noted.
Mariton emphasized that all the government has proven with its policy is that it simply does not like businesses, nor does it like the creators of employment.
The year-end bill provides for tougher penalties on taxpayers that refuse to disclose undeclared sources of income. For example, taxpayers refusing to disclose details as to the origins of undeclared sums invested abroad will be taxed at 60%, as it will be presumed that the assets originate from a gift.
The bill also provides that taxpayers are required to “justify” bank deposits exceeding declared income by more than EUR200,000 a year.
Fraud affecting the tobacco trade will also be specifically targeted, notably by ensuring the traceability of tobacco products to enable the authorities to better combat contraband and counterfeit networks, and by giving additional powers to customs officers.
The government plans to clamp down on value-added tax (VAT) fraud for used cars, by providing that any member of the intermediary chain will be severally liable for the VAT due for knowingly participating in fraudulent activity, for example carousel fraud.
Additionally, the bill introduces initiatives aimed at limiting the capacity of taxpayers to put in place tax optimization strategies against the spirit of the law.
Principal government-backed amendments to the bill made in committee include the institution of a tax credit for competitiveness and employment (CICE) for companies employing salaried staff, equal to 4% in 2013 of gross payroll for remuneration equal to or below 2.5 times the minimum wage, rising to 6% in 2014.
An additional amendment stipulates that the CICE tax credit must not serve to finance a rise in executive pay.
Another adopted amendment provides for the reform of VAT rates in France from January 1, 2014. Under the plans, the reduced VAT rate will be lowered from 5.5% currently to 5%, the intermediate VAT rate will rise from 7% to 10%, and the standard VAT rate will be increased from 19.6% to 20%.