CORPORATE TAXES
SIGNIFICANT DEVELOPMENTS
Value-added tax/VAT was introduced in French Polynesia effective January
1,1998. See the discussion below.
Investment tax credits/Investments in certain construction-related
activities are now eligible for tax credulous at varying rates. See "Tax
incentives" below.
Withholding tax /Specified payments to nonresidents are now liable to a
10% withholding tax. See below.
TAXES ON CORPORATE INCOME
Income tax rates range from 35% to 45%, plus an additional 5% if the
taxable income is greater than XPF50,000. The rate varies according to a
ratio computed as follows.
(Net value of certain assets +deductible personnel expenses)/Taxable
income
Where the ratio is more than 5.5, the tax trite is 35%. If the ratio is
less than 1.0, the rate is 45%. The rate increases by one percentage point
for every decrease in ration of one-half point.
"Net value of assets" includes depreciable fixed assets held within French
Polynesia and included in the balance sheet. "Deductible personnel
expenses" do not indeed salaries for chairmen and executive directors or
managers .
To determine taxable income, the accrual method of accounting must be
used.
Minimum tax/A minimum tax ,levied on a lump-sum basis, is equal to 0.5% of
the turnover,with a minimum of XPF50,000 and a maximum of XPF4 million.
Minimum tax paid can be deducted from regular income tax over the
following three financial years.
New companies are exempt from the minimum tax for the first three
financial years.
OTHER TAXES
Transaction tax/A transaction tax is levied on any business that is not
liable to corporate income tax (mainly unlimited liability entities). T is
computed as a percentage of turnover, according to the following scales.
TURNOVER %
OVER OTOVER
Services:
0 XPF 5,000,000……………………2.2
XPF 5,000,000 10,000,000 4.4
10,000,000 20,000,000 5.5
20,000,000 50,000,000 6.6
50,000,000 75,000,000 8.8
75,000,000 11.0
Trading activities:
0 XPF 20,000,000 1.1
XPF 20,000,000 40,000,000 2.2
40,000,000 80,000,000 2.72
80,000,000 200,000,000 3.3
200,000,000 300,000,000 4.4
300,000,000 5.5
Rate reductions are possible for certain activities with low profitability
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