Forfait

Forfait In taxation, the term “Forfait” (derived from French) refers to a lump-sum or flat-rate tax system where a taxpayer pays a fixed amount of tax instead of being assessed based on actual income, profits, or turnover. This system simplifies tax administration and compliance, especially for small businesses, farmers, or individuals with low or irregular income. Under a forfait system, the tax authority determines the tax amount based on estimated income, standardized criteria, or average profits for a specific category of taxpayers, rather than conducting detailed audits or requiring complete accounting records.

Example: A small café owner in France may be taxed under a forfait system, paying a predetermined annual tax amount based on estimated turnover instead of filing detailed income statements each year.