January 03, 2024
TAXATION POLICIES IN FRENCH GUIANA
INTRODUCTION
French Guiana, an overseas region of France located in South America, operates under a taxation framework aligned with French national laws while incorporating specific adaptations to address its unique economic and geographic challenges. Known for its vibrant economy driven by natural resources, aerospace activities, and ecological significance, the region benefits from tailored tax policies to stimulate growth and support local industries. These include income tax reductions, corporate incentives, and the distinctive dock dues system, making French Guiana an intriguing blend of European financial systems and localized economic strategies.
TAXATION AUTHORITY
For income tax purposes, France covers mainland France, the coastal islands and Corsica and overseas departments (Guadeloupe, French Guiana, Martinique, Réunion and Mayotte)
DIFFERENT TAX RATES
- Individual Tax- French Guiana follows the same individual income tax laws as mainland France. The French individual income tax system is a progressive tax system, which means that the tax rate increases as income increases. It has several income brackets, each corresponding to a different tax rate, which varies from 0% to 45%. In 2024, the income tax rates in France for individuals are as follows:
- Up to €11,294- 0%
- From €11,295 to €28,797- 11%
- From €28,798 to €82,341- 30%
- From €82,342 to €177,106- 41%
- Only €177,106- 45%
- Capital Gains Tax: Capital gains tax in French Guiana is governed by French rules. Capital gains are subject to a standard tax rate of 30%, which includes income tax at the rate of 8% and social security contributions at the rate of 20%.
- Corporate tax rate: French Guiana uses the French corporate tax system. As of 2024, the general corporate tax rate is 25%. Small and medium-sized businesses (“SMEs”) benefit from a reduced rate of 15% on the portion of profits not exceeding €42,500.
- Value Added Tax (“VAT”): For VAT purposes, French Guiana is considered an export territory in relation to mainland France, like non-European countries. Currently, VAT does not apply in French Guiana.
- Payroll Tax: Payroll tax applies to employers based in France who are exempt from VAT or whose VAT liability covers less than 90% of their income in the preceding calendar year. This tax primarily affects sectors such as banking, insurance, healthcare (including medical and paramedical services), associations, and other non-profit organizations.
The annual liquidation of the payroll tax is determined by applying a progressive scale by tranches to the gross amount of remuneration paid to each employee.
- Fraction less than or equal to €8,020 – 4,25 %
- Fraction greater than €8,020 and less than or equal to €16,013 – 8,50 %
- Fraction greater than €16,013 – 8,50 %
TAX DEDUCTIONS AND CREDITS
French Guiana has the same tax deductions and credits as mainland France. This includes deductions for mortgage interest, childcare costs, and energy-efficient home upgrades. The tax credit is available for Research and Development (“R&D”) projects, including investments in renewable energy initiatives.
TAX COMPLIANCE
Tax compliance in French Guiana is administered by the French tax authorities. The system is advanced, featuring modern online platforms for filing and payments. Compliance is reinforced through regular audits and penalties for violations. The efficient tax collection process benefits from France’s strong administrative framework.
OBSERVATION
French Guiana operates within a tax framework aligned with French national laws with specific adjustments to accommodate the unique economic landscape. Under the progressive system. The personal income tax rate ranges from 0% to 45%, while the corporate tax rate is 25%, with a reduced rate for SMEs. French Guiana does not include VAT and payroll tax affects specific sectors like banking, insurance, and non-profit organization. This sector offers tax relief on mortgage interest, Childcare expenses, and energy efficiency upgrades along with credits for research and development and investments in renewable energy. Tax compliance is managed by the French tax authority, the online system has been improved and benefited from enforcement measures.
HOW WE CAN HELP?
- Our Team can assist corporation in structuring operations to optimize tax liabilities, including profit- seeking enterprises income tax and business tac compliances.
- Our Team can help start-ups and business design tax- efficient operational models and advise on tax incentives available for new business in French Guiana.
- Our team can keep you informed about the latest tax amendments and compliances requirements to align with the changing tax structure.
For more information or queries, please email us at
[email protected]
Key Contact
Surendra Singh Chandrawat
Managing Partner
