France has been forced to abandon plans for a new corporate tax based on profits introduced in its 2014 budget bill last month after protests by French manufacturers, who claimed it would unfairly penalise them in the global marketplace.

The new 1% Operating Profits Levy, based on Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) was to replace the existing annual flat tax that existed on top of other levies, and was proposed on 25 September. It was intended to bring in €2.5bn (£2.11bn).

In an interview with local media at the weekend, finance minister Pierre Moscovici said the new tax 'will not be', and that the government would be introducing a temporary increase in the existing corporate tax rate.

Moscovici also announced that the government will be launching launch consultations with business leaders and others before finalising the new tax plans.

Richard Asquith, global head of tax, TMF Group, said: 'The new tax hit a wall of protest as it was seen as hurting France's global prospects. It is not yet clear if a rise in the existing corporation tax will be enough, or whether more spending cuts will be required.'

The planned levy on profits was designed to help bring down France's deficit, currently 95.1% of GDP - one of the highest within the Euro countries. Earlier this year, the European Commission gave France an additional two years to bring its deficit down to the target of 3% GDP set for Euro-currency countries. Recent predictions suggest the French economy is likely to see 0.1% growth this year and 0.9% growth in 2014.