IPP Report n°21 - March 2019

The heterogeneity of implicit corporate tax rates in France: descriptive findings and explanatory factors

IPP Report n°21 – March 2019

Authors : Laurent Bach, Antoine Bozio and Clément Malgouyres

Contact : clement.malgouyres@ipp.eu

Summary :

Based on a set of long-term tax data, from 2005 to 2015, this report documents the tax rate on profits in France. Average implicit rates for profits among non-financial corporations were relatively stable over the entire period studied, rising from 19% in 2005 to 21% in 2015.

Large companies benefit from lower effective rates than other companies. Thus, in 2015 the average implicit rate for large companies was 17.8%, compared with 23.7% for small and medium-sized enterprises (SMEs).

However, there is some convergence in the implicit tax rate for large companies compared with other companies. The average implicit rate for large firms increased from 10% to 17.8%, while the average implicit rate for SMEs fell slightly from 27.7% to 23.7%. This convergence can be explained by the diminishing role of the deductibility of financial charges.

Finally, the report analyses the dispersion of tax rates. Despite being the subject of close attention, differences between firm-size categories or between sectors capture only a small part of the variance in implicit rates during this period. The heterogeneity between firms is persistent over time and does not reflect transitory situations.

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logo-pdf-minThe heterogeneity of implicit corporate tax rates in France: descriptive findings and explanatory factors (in French)

 

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