Tax laws French Polynesia (France)
French Polynesia, as an overseas collectivity of France, follows French tax laws with specific adaptations for the region. The tax system is designed to promote local economic development while also maintaining consistency with mainland France's laws. Here’s an overview of the tax laws in French Polynesia:
1. Personal Income Tax
- Progressive Tax System: French Polynesia applies the same progressive personal income tax system as France, though with some exceptions for local income levels.
- 0% for income up to €14,000 (approx. XPF 1.7 million)
- 11% for income from €14,001 to €27,000
- 30% for income from €27,001 to €78,570
- 41% for income from €78,571 to €168,994
- 45% for income above €168,994
- Local Taxation: French Polynesia has the authority to adjust the income tax rates to meet the economic conditions of the region, but in practice, the tax rates are generally in line with mainland France.
2. Corporate Income Tax
- Corporate Tax Rate: The standard corporate income tax rate in French Polynesia is 30%, which aligns with France's tax rate.
- Incentives for New Businesses: There are tax incentives available for businesses, particularly those in certain sectors, such as tourism and agriculture, designed to stimulate investment in French Polynesia.
- SMEs: Like in mainland France, small and medium-sized enterprises (SMEs) can benefit from reduced rates for profits under certain thresholds.
3. Value Added Tax (VAT)
- Standard VAT Rate: French Polynesia has its own local VAT system, which is different from the mainland French VAT system.
- Standard Rate: 16% (lower than mainland France's 20%).
- Reduced Rates: For essential goods and services (e.g., food, medicine, and transportation), a reduced VAT rate of 5% or 8% may apply.
- Import Duty: Goods imported into French Polynesia from outside the region may be subject to import duties in addition to VAT.
4. Social Security Contributions
- Healthcare and Pension: Social contributions are also required in French Polynesia to fund healthcare, pensions, and unemployment benefits. These contributions are based on income and generally follow French national laws.
- Employers' Contributions: Employers in French Polynesia must make social security contributions, including those for health insurance, pension funds, and other welfare-related purposes.
- Rates: The rates vary depending on the income bracket and type of contribution, but they are generally in line with the French system.
5. Property Taxes
- Property Tax: Property owners in French Polynesia are subject to the taxe foncière (property tax) on land and buildings. The rates for this tax are determined by the local municipalities in French Polynesia.
- Residence Tax: There is also a residence tax (taxe d'habitation) for occupants of property. This tax is generally applied to those occupying non-primary residences.
6. Inheritance and Gift Tax
- Inheritance Tax: Inheritance taxes in French Polynesia follow the same inheritance tax system as mainland France. The tax is applied based on the relationship between the deceased and the beneficiary, and the rates can range from 5% to 60% depending on the inheritance value and familial relationship.
- Gift Tax: Similar to inheritance taxes, gifts are taxed based on the relationship between the giver and the recipient, and there are exemptions and reduced rates for certain direct family transfers.
7. Environmental Taxes
- Environmental Tax: French Polynesia applies taxes aimed at reducing the environmental impact, such as taxes on pollution and certain types of waste.
- Carbon Tax: There is a carbon tax on fossil fuels, in line with France's broader policy on climate change and sustainability.
- Waste Management: Local taxes may also apply to waste management and disposal services, particularly for industrial activities.
8. Wealth Tax
- Wealth Tax (IFI): French Polynesia follows the French Wealth Tax system. The Impôt sur la Fortune Immobilière (IFI) is a tax on real estate wealth, and it applies to individuals with assets exceeding €1.3 million (approx. XPF 170 million) in real estate. The tax rates range from 0.5% to 1.5% depending on the value of the assets.
9. Business and Economic Incentives
- Investment Incentives: To stimulate economic activity, French Polynesia offers various tax incentives for new businesses, especially those in tourism, agriculture, and sustainable development.
- Reduced Tax Rates: Certain businesses may qualify for reduced tax rates or tax holidays for a defined period, particularly those investing in areas critical to the development of the region.
10. Customs and Import Duties
- Customs Duties: French Polynesia applies customs duties on goods imported from outside the region, in line with the EU customs regime.
- Free Trade with France and EU: Goods moving between French Polynesia and mainland France, as well as other EU territories, are generally exempt from customs duties.
11. Double Taxation Agreements (DTAs)
- French Polynesia, being part of France, is covered under France's Double Taxation Agreements (DTAs). This means that income earned in French Polynesia by residents or businesses from foreign sources may benefit from tax relief to avoid double taxation, depending on the relevant treaties.
Conclusion
French Polynesia’s tax system largely mirrors mainland France’s tax laws but with adaptations that consider its specific geographical and economic conditions. The region has progressive income taxes, corporate tax incentives, VAT at a lower rate than mainland France, and tax benefits for businesses in key sectors like tourism and agriculture. Social security contributions, inheritance taxes, property taxes, and environmental taxes are also part of the system, and the region benefits from double taxation treaties through its status as an overseas collectivity of France.
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