Draft extension for Madeira's Free Trade Zone regime extended

By TPN/Lusa, in News · 27-12-2020 14:00:00 · 0 Comments

The government has approved a draft law to extend Madeira Free Trade Zone regime.

This diploma, which will be submitted to the Assembly of the Republic, determines the “extension, for one year, of the deadline for the issue of licenses to operate in the Free Zone of Madeira, and alteration of the respective regime”, reads in the same note.

The Government also wants, with this legislation, the “extension for five years of the tax benefits with demonstrated effectiveness and efficiency for public policies”, as well as “the inclusion of the tax benefit related to cultural patronage in the list of tax benefits without character markedly temporary, ceasing to have a limited duration ”. In addition, the Government intends to “extend, for a period of one year, the tax benefit related to income from literary, artistic and scientific property” and the “benefits provided for in the Investment Tax Code, in order to accompany the recent authorised extension by the European Commission ”.

These intentions on Regime IV of the Madeira Free Zone are contained in a letter sent to the Regional Government of Madeira by the Assistant Secretary of State for Tax Affairs, to which Lusa had access. "It is the Government's intention to communicate to the Commission the intention of the Portuguese State to proceed with the extension, for one year (i.e. until 31 December, 2021) of Regime IV of the ZFM," says the letter.

In the letter sent to the Regional Government of Madeira, António Mendonça Mendes states that this extension will be made through a legislative initiative that, at the same time, "proceeds with the introduction of a set of amendments to Article 36-A of the EBF [Statute of the Tax Benefits] which aim to safeguard, in the future, the full compatibility of ZFM Regime IV with Community law ". The amendment to the aforementioned article of the EBF aims, therefore, to make clear in the law the recommendations that the European Commission issued regarding the regime of the ZFM, so that there are no abusive uses of the regime.

Following an in-depth investigation launched in 2018, the community executive announced on December 4 that he concluded that "the implementation of Regime III of the Madeira Free Trade Zone in Portugal is not in line with the Commission's State aid decisions", because "the objective of the approved measure was to contribute to the development of the outermost region of Madeira through tax incentives", aimed exclusively at companies that create jobs in the region, which concluded that it did not happen. Therefore, Portugal must now recover all "undue aid, plus interest, from these companies", determined the Commission, which did not quantify the amounts in question.



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