Bruno Le Maire, France's Minister of the Economy, wants to introduce a new legislative provision so that major French business leaders domiciled abroad are obliged to pay their taxes in France.
This request comes against the backdrop of a complicated social climate, marked by the demands of the yellow vests for fairer, more redistributive taxation. But it's actually a recurring issue in public debate for several decades, while, according to the OECD, tax evasion generates a loss of revenue estimated at between 30 and 60 billion a year for the French state.
The government is therefore planning to go on the offensive, by including tax issues at the heart of the Grand Débat National. By the end of January, more than 5,000 of the almost 50,000 tax-related proposals had been posted on the public digital platform created by the government.
Let's take a look at Bruno Le Maire's proposed law
The Minister of the Economy has already outlined a timetable: the text will be published in the next few weeks. So there's no time to lose. Not only does he wish to target those domiciled abroad, but also those occupying the position of Chairman and Chief Executive Officer, or Chief Executive Officer more broadly.
All executives of companies listed on the CAC40 or SBF120 indexes should therefore be concerned.
It would therefore be a Franco-French measure, which would dispense with any renegotiation of bilateral tax treaties with other European Union countries.
In fact, some countries deliberately practice tax dumping , to the detriment of other EU countries, as tax policy is left entirely to the discretion of each individual country.
Ireland, the Netherlands and Portugal are the new Eldorados for European companies.
In the event of non-compliance with the law, the government has also announced an increase in penalties for tax evaders. Tax optimization practices - which, it should be remembered, are not illegal - should be limited.
More broadly, the opening up of this issue puts the whole subject of corporate taxation back on the table. Like their managers, French companies that make profits in France must pay their taxes in France.
Emmanuel Macron had already reiterated this principle in his televised address on December 10, 2018.
The government is therefore considering the idea of a better framework for corporate taxation.
On the one hand, the reduction in the corporate income tax (IS) rate will indeed be maintained in October 2019, and the objective of bringing it down to 25% by 2022 has not been called into question.
On the other hand, Bruno Le Maire has affirmed his desire to create a minimum corporation tax , which he sees as an effective means of combating corporate tax optimization practices.
The possibility of creating a 0% VAT rate on certain essential products was also raised by the tenant of Bercy, who said he was open to examining such a provision.
It's still too early to give a definitive answer, but it's highly likely that the government will propose tougher criminal penalties, with an increase in the prison sentence that could be applied, for example.
The statement comes after Carlos Ghosn was suspected of tax fraud and embezzlement, and was arrested in Japan at the end of November 2018.
We think that an increase in fines could be voted.
"Sanctions will have to be exemplary," said the French Minister of the Economy.
The possibility of extending the bans to management functions or running a business could also be applied.
This new provision to better regulate the tax domicile of big business is massively supported by the popular electorate, and is already on the agenda of the Great National Debate.
It's a safe bet that this measure will raise a great many questions, as well as curiosities.
"We'll see what the French ask of us at the end of the great national debate as an absolute priority, and we'll obviously take the utmost account of it," said Bruno Le Maire.
To date, the government has made no commitment as to the timetable.
Written by our expert Paul LASBARRERES-CANDAU
February 11, 2019
