French tax rate claim 'not accurate'

A SPOKESMAN for French finance minister Christine Lagarde has told The Irish Timesit is "inaccurate" to say that France had a lower effective corporate tax rate than Ireland.

He said the nominal French rate was 33.3 per cent, although companies could benefit from certain allowances by investing in research and hiring older people, for example.

“But it’s not at all automatic. There are a lot of companies that don’t avail of these mechanisms, and they pay 33.3 per cent,” the spokesman added, “so it is inaccurate to say that in France it’s lower than in Ireland.

“If you don’t avail of these possibilities . . . you pay the maximum tax rate, and that maximum is a lot higher than in Ireland.”

Minister for Finance Michael Noonan, who made the claim, seems to have based it on a recent World Bank/PricewaterhouseCoopers report, Paying Taxes 2011, which suggests France's effective tax rate on company profits is just 8.2 per cent. The same report put Ireland's effective rate at 11.9 per cent, compared to a nominal rate of 12.5 per cent.

Asked whether France was holding to its position that any reduction in the interest rate on Ireland’s emergency loans was contingent on Irish concessions on tax, a spokesman for the Élysée Palace referred to comments to this effect by President Nicolas Sarkozy in Brussels last Friday.

“He was pretty clear about this subject. Things haven’t changed,” said the spokesman.