Tax and Fiscal Policy in Response to the Economic Crisis in France after the Lockdown
By Carole Hong Tran, FIDAG SARL
In a post-crisis environment, businesses are increasingly exposed to solvency risks, in addition to liquidity risks, as the crisis continues. Through many immediate decisions, the French government is trying to limit the adverse impacts on the economy and to help businesses stay afloat. Maintaining business cashflow has been a core goal of the fiscal policy measures which have included:
- Extending deadlines for tax filing for three months;
- Deferral of tax payments for three months and, in the most diffcult situations, direct tax rebates can be decided in the framework for an individualised examination of applications;
- A fast-track procedure for corporate tax claims refundable in 2020 is being implemented;
- Through the solidarity fund financed by the government and the regions, an aid up to EUR 1,500 is granted for very small enterprises, the self-employed, professionals, and the most affected micro-entrepreneurs who have no more than 10 employees, an annual turnover of less than EUR 1 million, and an annual taxable profit of less than EUR 60,000, particularly affected by the economic consequences of COVID-19;
- Mobilisation of EUR 300 billion from the government to guarantee cash lines of credit banks that businesses may need. Indeed, until 31 December 2020, companies of all sizes and legal forms may apply to a stateguaranteed loan from their regular bank to support their cashflow.
- Support from the government and the Banque de France to negotiate with its bank a rescheduling of bank loans;
- Maintaining employment in companies through the simplified and reinforced short-time work schemes and wage subsidies;
- A support plan for French exporting companies.
In the meantime, the path to exiting the crisis may be long. The French government will need to explore all options for tax policy reform to restore its public finances, both in terms of revenue levels and of the tax structure. The debate for next year’s finance bills is starting with intense work programs in the coming days.
Carole Hong TranGGI member firm
Audit & Accounting, Tax, Advisory and Corporate Finance
T: +33 1 42 80 20 81
FIDAG SARL was created in 1985 and specialises in accounting, auditing, and advice to SMEs where they are engaged in international operations, particularly tax issues, social and labour law, legal problems, accounting, and the management of operations taking place in at least two different countries.
Carole Hong Tran is a Partner with FIDAG, French Chartered Accountant, and ACCA member, with considerable expertise in statutory audit and due diligence operations.
Published: Auditing, Reporting & Compliance Newsletter, No. 04, Autumn 2020 l Photo: tanaonte - stock.adobe.com