A report issued by the Board of Compulsory Levies (CPO) in France suggests that small and medium enterprises have benefited by the introduction of the local economic contribution in place of the local business tax. This contribution is the most important local tax paid by enterprises in France and is made up of the annual property contribution that is computed on the rental value of the fixed assets and the annual contribution on value added.
The local business tax reform resulted in a decrease in local tax for 60 percent of enterprises, while increasing the tax for 25% and keeping tax levels the same in other cases. The new system takes more account of the amount of economic activity of a company and is therefore more equitable in its incidence. The report concluded that under the new local business tax system enterprises can be more competitive.
