DS: France — Certain Income Tax Measures Constituting Subsidies

This summary has been prepared by the Secretariat under its own responsibility. The summary is for general information only and is not intended to affect the rights and obligations of Members.


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Complaint by the United States.

On 5 May 1998, the US requested consultations with France in respect of prohibited subsidies provided by France. The United States alleges that, based on unofficial English translations of the relevant legislation and descriptions in secondary sources, it is its understanding that under French income tax law, a French company may deduct temporarily, certain start-up expenses of its foreign operations through a tax-deductible reserve account. The US also believed that a French company may establish a special reserve equal to ten percent of its receivable position at year end for medium-term credit risks in connection with export sales. The US contended that each of these measures constitutes an export subsidy, and that the deduction for start-up expenses constitutes an import substitution subsidy, and as such both measures violate Article 3 of the SCM Agreement.


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