Great national debate: the contribution of the French Entrepreneurs who are active internationally

In the context of the Great National Debate initiated by President Emmanuel Macron last January, the Foreign Trade Advisors of France (CCEs) were keen to make their contribution and come up with solutions.

By mobilizing their network of French business leaders in more than 150 countries around the world, the CCEs looked at the situation in their country to assess its consequences on the competitiveness of French businesses internationally, and on the attractiveness of France to foreign investors through different scopes: forms of social dialogue and the social climate; Functioning of public administration, and Taxation.

The results of this poll confirm, for these three points, a real shortfall inFrance’s attractiveness.

THE ADMINISTRATIVE SYSTEM STILL GENERATES TOO MANY CHARGES TO BUSINESSES (77%), AND THE PROCESSING OF INFORMATION IS TOO SLOW (57%).

Administrative procedures are burdensome and do not meet the requirements of businesses (opening hours, time available to reconcile with bureaucratic requirements, in-house skills…), which differ depending on the business sector and size. They generate far too heavy a workload, and responses to issues become less effective and less consistent from one procedure to the next.

DIALOGUE IS STILL TOO CONFLICTUAL, WEIGHING HEAVILY ON EFFICIENCY AND UNDERMINING A WORRYING AND UNANIMOUSLY POORLY PERCEIVED SOCIAL CLIMATE.

Not surprisingly, and in connection with the media hype that surrounded the Yellow Vests movement for more than 4 months, the French social climate received an extremely high (80%) – or very high – negative rating from the CCEs and their foreign colleagues. While recent reforms of the Labor Code have had, for the vast majority of the CCEs,  a positive impact on the attractiveness of France, they nevertheless have not addressed the problems of representativeness, trust and transparency tied to the current system of trade union representation.

RETROACTIVITY OF FISCAL LAW AND THE LEVEL OF TAXATION ARE A HINDRANCE TO FRANCE’S ATTRACTIVENESS.

The French taxation system is perceived by the CCEs as a hindrance to France’s attractiveness, particularly due to its instability and the over-high taxation rates. According to the CCEs, a more stable fiscal policy and reduction in tax rates could produce new factors of attractiveness for France. The lowering of the corporate tax rate is one important criterion of attractiveness , 52.8% of the CCEs feel that an 8% reduction in corporation tax would be a useful measure. Furthermore, they emphasize that this reduction would constitute a competitive advantage to confront dumping by foreign countries, and attract new foreign investors. Accordingly, nearly 50% of respondents consider that a rate of around 20% would help improve France’s attractiveness.

Nevertheless, the CCEs noted positive items that would help to enhance the country’s attractiveness.

Administrative personnel are considered to be skilled (52%);

Reforms of the 2017 Labor Code contributed to improving social dialogue and thereby the attractiveness of France (79%);

The draft reform lowering corporation tax to 25% will also improve France’s appeal;

Income tax largely fulfills its role of redistribution (58%) but ought to be extended to the entire population;

The transformation of the ISF (wealth tax) into IFI (wealth tax on real estate) has helped  restore the competitiveness of the French tax system.

The propositions put forward by the CCEs are as follows:

Administration:

Implement a single point-of-contact administrative system for businesses (by sector or size) adapted to local requirements (opening hours, language, regulatory constraints) for expatriates

Taxation:

Repeal the retroactive nature of tax laws;

Reduce corporation tax to a rate of between 10% and 20%;

VAT (Value Added Tax): reduce VAT on basic necessities and on standard products, maintain or even increase VAT on luxury items.

The CCEs are adverse to the idea of an increase in estate tax, and consider that the return of the wealth tax (ISF) would have a clearly negative impact on France’s attractiveness to foreign investors (79%).