Great national debate: the contribution of French Entrepreneurs active internationally

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

By mobilising their network of French business leaders in more than 140 countries around the world, 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; Taxation.

The results of this poll confirm, for these three points, a real shortfall in attractiveness for France.

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 CCEs and their foreign colleagues. While recent reforms of the Labour Code have, for the vast majority of CCEs, had 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 tax system is perceived by CCEs is a hindrance to France’s attractiveness, particularly due to its instability and the over-high rates of taxation. According to 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 for CCEs, 52.8% of whom feel that an 8% reduction in corporation tax would be a useful measure. Furthermore, they emphasise 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, 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 Labour 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 fulfils 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 to restore the competitiveness of the French tax system.

The propositions put forward by 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 20% and 10%;

VAT: reduce VAT on basic necessities and on standard products, maintain or even increase VAT on luxury items.

CCEs are averse 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%).