However reform is already underway under President Emmanuel Macron.
France is the 6th most complex jurisdiction in the world for accounting and tax compliance according to TMF Group's Financial Complexity Index 2018, which ranks 94 jurisdictions across Europe, the Middle East, Africa, Asia Pacific and the Americas; 1 being most complex through to 94 the least complex.
France's 6th placing – behind Argentina, Italy, Turkey, Brazil and China in the no.1 position – follows its 2017 inaugural ranking of 11th most complex. The Cayman Islands at 94 is once again the least complex jurisdiction in the world for financial compliance.
To determine the rankings with its in-country experts, TMF Group used a 74-question survey with weighted complexity parameters, namely; regulatory compliance, tax, statutory reporting and bookkeeping.
"French regulations and administrations are notoriously complex, particularly for those entering the market for the first time," commented Managing Director of TMF France David Orme Lynch.
"While France may have broken into the global top 10 this year, reform is already underway under President Emmanuel Macron, for example; the corporate income tax rate is progressively decreasing, a flat tax rate of 30% on capital gains was introduced and employment law was updated to make it more flexible to companies requirements. On the other hand as of 1 January 2019, withholding personal income tax at source on the employee's payslip will come into play, and could again increase complexity of payroll and personal income tax during the transition period at least."
"When aligning timing of personal income tax and employee's salary payments, it is interesting to note that the French Government granted an exceptional personal income tax credit on 2018 revenues (subject to various limitations). We do expect initiatives such as these will influence France's overall Financial Complexity Index ranking in the future."
TMF Group's second Financial Complexity Index shows that many countries are passing reforms to simplify their economies not only to attract investment, but also to ensure the country ticks the compliance box for global moves toward transparency and conformity.
"Each jurisdiction is tackling these global issues in a different way, and short-term complexity spikes are common. However we expect the initiatives will reduce the accounting and tax complexity in these jurisdictions in the future" explained Head of Benelux and Western Europe at TMF Group, Huib de Kanter. "When it comes to cross-border business success, knowing and understanding the local requirements for financial compliance can prove vital. That's where seeking the support of in-country accounting and tax experts, such as TMF France, allows companies of all sizes to maintain focus on their core business."
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