By 2018-07-06 InPortugal

Brussels opens formal investigation into controversial Madeiran tax breaks

In a week when the anti-oil campaign has reason to celebrate, Brussels has just announced that it is opening a formal investigation into the tax rules governing Madeira’s ‘Zona Franca’ (Free Zone).

These have been increasingly under fire for “benefitting multinationals and rich individuals” when they were principally designed to capture investment to help the archipelago.

Among companies that have “saved millions” by being ‘based for tax purposes’ in the Zona France is Saipem Portugal, the subsidiary of Italian oil company ENI – due to start test drilling off the coast of Aljezur in collaboration with GALP within the next few weeks.

Público alludes particularly to Saipem Portugal today, saying it is one of the companies that has “most benefited” from the Zona Franca’s advantageous tax regime.

Earlier this year, anti-oil campaigners highlighted the issue, suggesting one way or the other over the last few years, ENI and GALP between them have received over €270 million in tax breaks from the Portuguese government.

Público has now homed in on the case of ENI’s subsidiary, saying Saipem has “accumulated at least 202 million euros in fiscal benefits since 2010”.

The paper quotes the European Commission as saying it is “ concerned that the tax exemptions granted by Portugal to companies established in the Madeira Free Zone are not in line with Commission decisions and state aid rules”.

MEPs travelling to Portugal earlier this year said very much the same. “For 30 years, the European Commission has been approving very low tax rates on the Portuguese island of Madeira. The goal was to attract companies that create jobs for Madeira’s citizens and boost the local economy. But in fact, mainly multinationals and rich individuals have been benefitting from the low taxes, while other countries have been losing billions of tax revenues. And, as our analysis shows, there are hardly any new jobs for the people of Madeira”.

Socialist MEP Ana Gomes was part of the visit, and put the situation into one simple sentence: “You cannot accept (tax evasion) in your own territory and condemn it outside”.

Where this will leave Saipem Portugal vis-a-vis Aljezur’s proposed offshore well is unclear, but the news means Brussels is taking the situation seriously – and that can only hearten activists who are tomorrow afternoon staging anti-drilling protests on multiple national beaches.

For details of a beach near you, see:

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