Exemptions from social security contributions: a new reprieve
The Minister for Overseas Territories, Naïma Moutchou, announced on Tuesday 28 July that the social security contribution exemption schemes and the tax incentive scheme for productive investment will be retained in the draft Finance Bill for 2027. This is good news for the territory’s economy, which has avoided the dreaded cutbacks for yet another year.
The Comptroller-General of the Armed Forces and the Inspector-General of Finance were commissioned by the government last April to evaluate the RAFIP (Tax Incentive Scheme for Productive Investment) and the LODEOM (Law for the Economic Development of Overseas Territories), which was introduced in 2009 for the latter. Their report, submitted to the government, set out several proposals aimed at simplifying these schemes and improving their effectiveness. The conclusions will inform the work set to begin in the autumn, in consultation with the relevant stakeholders and in the light of recent parliamentary reports on social security contribution exemptions. This review will take place within a framework that has now been clarified: namely, the retention of the LODEOM and the RAFIP in the draft Finance Bill for 2027.
As she had announced during her visit to the region, Naïma Moutchou reiterated that the aim is to improve these schemes without calling them into question. A second review is therefore expected to be launched in the coming months to explore avenues for improvement. “We will tackle fraud and abuse. But we will also take a broader view to consider an economic model on a territory-by-territory basis that will address the issue of business funding,” the minister said. The very next day after her announcement, on Wednesday 29 July, she held a follow-up meeting on the Overseas Economic Roadmap. In the coming weeks, she will therefore present “an ambitious roadmap drawn up in collaboration with all stakeholders, to provide long-term support for the growth and attractiveness of these territories”.
This decision on the LODEOM provides overseas businesses with the stability they have been waiting for, and ensures the continuation of two essential tools for supporting employment, investment and the economic development of the territories.
