Explanatory Memorandum to COM(2001)442 - Authorisation of Portugal to apply a reduced rate of excise duty in the autonomous region of Madeira on locally produced and consumed rum and liqueurs and in the autonomous region of the Azores on locally produced and consumed liqueurs and eaux-de-vie

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dossier COM(2001)442 - Authorisation of Portugal to apply a reduced rate of excise duty in the autonomous region of Madeira on locally produced and ...
source COM(2001)442 EN
date 27-07-2001
In its requests dated 15 June 2000 and 28 February 2001 concerning the measures to implement Article 299 i of the EC Treaty relating to the outermost regions, Portugal asked for authorisation to apply in Madeira to locally produced and consumed rums and liqueurs, and in the Azores, to locally produced and consumed liqueurs and eaux-de-vie, a reduced excise duty rate, which may not be set more than 75% below the national rate of duty applicable. The reasons given by Portugal for the requests show that a reduction of excise duty is essential for the marketing of these products on the islands. Given the high production costs arising mainly from geographical factors - small firms producing limited quantities, remoteness, fragmented terrain, tight local market - it is clear that rums, liqueurs and eaux-de-vie produced in Madeira and the Azores are at a competitive disadvantage on local markets compared to similar spirits imported or supplied from other parts of the Community. As sales on the local market absorb the bulk of the islands' production of alcoholic beverages, a reduction of excise rates is essential for the survival of the local rum, liqueur and eau-de-vie industry.

Weighing the importance of the legal certainty local economic operators require to develop their commercial activities against the need to set a time limit on tax derogations, the Commission proposes authorising this decision for a period of 7 years on the understanding that after 4 years Portugal will submit a report to the Commission enabling it to assess whether the reasons that justified the granting of the reduced rate still exist.

Comments on the proposed measures

Article 1 authorises Portugal to apply a reduced rate of excise duty on locally produced and consumed rum and liqueurs in the autonomous region of Madeira, and on locally produced and consumed liqueurs and eaux-de-vie in the autonomous region of the Azores.

Article 2 defines what should be understood by rum and liqueurs produced in Madeira and by liqueurs and eaux-de-vie produced in the Azores.

Article 3 sets the amount of the reduction.

Article 4 states the period for which the decision applies. A mid-term evaluation report will be requested for the purposes of assessing whether the reasons which justified the granting of the present derogation still exist.

Article 5 is purely formal.