Fiona Wishlade was an invited speaker at a major conference in Funchal, Madeira on 25 March. The aim of the conference, which attracted around 250 participants, was to assess the implications of the State aid rules for the fiscal regime of Madeira and the progress in securing European Commission approval for a new regime post-2013.
Professor Clotilde Celorico Palma, formerly of the Code of Conduct Group on Harmful Taxation, began with a historical perspective on the negotiations between the Portuguese authorities and the European Commission leading to the current fiscal regime.
Fiona Wishlade of EPRC presented the results of a study for the Madeira development agency on the State aid rules governing aid in the Outermost Regions (OMRs). The study examines the implementation of the rules and their impact 'on the ground', especially in the case of tax concessions. Of key importance, the study showed that the current regime, which is about to expire, has significant incentive effect. The study also considers aspects of tax competition noting that more generous measures than those authorised in the OMRs may be operated by EU national governments or regional governments with the requisite degree of autonomy and that such measures fall outside the State aid rules. This raises important issues for EU Cohesion policy and small island economies, as well as for the relationship between EU competition policy and taxation.
A summary of the study, which was used in the notification to the Commission, is expected to be made available by SDM in due course. Last, Dr Francisco Costa, President of SDM, presented a timeline of the current negotiations with the Commission, which ended abruptly in June 2011 when the Portuguese government effectively withdrew the notification in what appeared to be the closing stages of the approval process.