Overseas Minister Naïma Moutchou announced on 28 July 2026 that the social charge exemption schemes under the Law for the Economic Development of Overseas Territories (LODEOM) and the Productive Investment Tax Relief regime (RAFIP) would be maintained in the 2027 draft budget. The news brings significant relief to Réunion's business community, which had feared cuts to these mechanisms essential for the competitiveness of France's overseas territories.
30,000 Businesses and 120,000 Jobs Covered
On Réunion, LODEOM is a cornerstone of the local economic model. Its social charge exemptions benefit around 30,000 businesses and support approximately 120,000 jobs on the island. With unemployment exceeding 18%, preserving these mechanisms is critically important for maintaining activity and employment in a territory that faces significant structural economic challenges.
The Minister's Words
"This is a clear choice we are making with the Prime Minister: one of stability, confidence and support for employment."
The minister confirmed that a government taskforce is working on proposals to simplify and improve the efficiency of these schemes. Consultations with business and social stakeholders will begin after the summer recess, but within a framework where preservation of the mechanisms is now "guaranteed."
RAFIP: Productive Investment Also Secured
RAFIP, which enables overseas businesses to finance productive investments through partial tax relief, is also maintained. This scheme is particularly crucial for Réunion's SMEs, which struggle to access bank financing under mainland French market conditions.
Why It Matters
LODEOM has for years been subject to recurring budgetary pressure from Paris. Each finance bill revives fears of reduction or elimination. The 28 July decision sends a rare stability signal that should reassure Réunion investors and employers in the near term. It also opens a substantive debate about how these tools need to evolve to better target the island's forward-looking economic sectors.
Sources: Imazpress, La 1ère (Franceinfo Réunion).