Madeira To Sue The EU Over New Tax Regime
It was announced yesterday that the Autonomous Regional Government of Madeira
is to sue the European Union over its failure to ratify the Madeira International
Business Centre's new legal and tax regime, following the action between the
Government of Gibraltar and the EU over the review of the alleged illegal Gibraltar
State Aid scheme. EU Laws state that the Commission must publish the results
of its review of such a scheme within 18 months of its announcement in the EU's
Official Journal, which took place in this case in June 2000. The EU's decision
was due by 28th December 2001. This legal action only affects the direct tax element of the State Aid scheme;
concomitant changes to the VAT rate don't form part of the State Aid scheme.
The EU's legal argument is understood to be that the 18 month rule does not
apply as it was a review of a current State Aid programme and not a review of
an amended or new proposed scheme. In any case, such reviews are required to
be sanctioned by the Commission and this has not happened. Tim D Wilkie, Partner in Madeira advisory firm Corporate and Treasury, comments:
"This may be a smoke screen to hide the fact that the EU have done nothing
about the renewal of the scheme and that the Portuguese Government seems to
have sat on their hands since the 2001 budget which was passed in December 2000.
This action, by RAM, would seem to contradict recent informed speculation that
a State Aid new scheme for Madeira was expected to be announced in the first
semester of 2002 which would be 'rubber stamped' through EU procedures." In view of the uncertainty, Corporate and Treasury advises Madeira businesses
not to use any companies licensed after the 1 January 2000, saying: "We
discount these moves and continue with our advise that pre 1 Jan 2000 companies
should only be considered as viable." .
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