French president offers ‘guarantee’ on taxes in bid to lure foreign investment

French president François Hollande appealed to foreign business leaders to invest in his country yesterday, offering them simpler and more stable tax policies as his unpopular government tries to spur growth and create jobs.

Hosting 30 heads of French units of foreign companies at the Elysee Palace, Mr Hollande pledged to guarantee taxes on an investment would not rise later — as has happened in the past — and Vat and duty rules for firms would be streamlined this year.

The Socialist president, who last month announced France would phase out €30bn in charges on companies by 2017 to reverse its slide in trade competitiveness, also said business taxes would be harmonised with those of its neighbours, especially Germany, by 2020.

“The objective is to ensure the stability of tax standards and mechanisms,” Mr Hollande told leaders of Siemens, Samsung, Volvo, and Nestle, among others.

“A business, whether French or foreign, that wants to invest will have a commitment from the administration that the tax rules will remain the same, and that will be a guarantee.”

The government believes a rebound in company investment can help boost growth in France’s GDP to at least 0.9% this year after stagnation in 2013, and help bring down joblessness from near 11%.

But scepticism runs high. A survey showed that nine out of 10 chiefs executive of firms did not believe the government could boost economic output or help their companies become more competitive.

A massive 89% did not consider Mr Hollande able to reduce public spending, the survey showed.

The meeting aimed to reassure foreign business leaders unnerved by France’s high overall tax rate, history of tense industrial relations and frequent run-ins with business, such as his government’s threat in 2012 to nationalise an ailing ArcelorMittal steel plant.


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