Proposal for a Council Decision amending Decision 2004/162/EC with regard to its implementation in Mayotte from 1 January 2014

The provisions of the Treaty on the Functioning of the European Union (TFEU) which apply to the outermost regions of the EU, including the French overseas departments (DOMs), do not in principle allow any difference in the DOMs between the taxation of local products and the taxation of products from metropolitan France or the other Member States. Article 349 of the TFEU (former Article 299(2) of the EC Treaty), however, provides for the possibility of introducing specific measures for those regions because of the permanent handicaps which affect the economic and social conditions of the outermost regions.

Council Decision 2004/162/EC of 10 February 2004 (as amended by Council Decisions 2008/439/EC of 9 June 2008 and 448/2011/EU of 19 July 2011), adopted on the basis of Article 299(2) of the EC Treaty, authorised France, until 1 July 2014, to apply exemptions or reductions to the dock dues tax for certain products produced in the overseas departments of Guadeloupe, Guyana, Martinique and Réunion. The Annex to that Decision contains a list of the products to which tax exemptions and reductions may be applied. The difference between the taxation of locally manufactured products and the taxation of other products may not exceed 10, 20 or 30 percentage points, depending on the product.

Decision 2004/162/EC sets out the reasons for adopting the specific measures: remoteness, raw material and energy dependence, the obligation to build up larger stocks, the small size of the local market combined with the low level of export activity, etc. The combination of these handicaps means that production costs, and therefore the cost price of goods produced locally, are increased, so that without specific measures they would be less competitive than those produced elsewhere, even taking into account the cost of transporting such goods to the DOMs. This would make it harder to maintain local production. The specific measures contained in Decision 2004/162/EC were thus designed to strengthen local industry by making it more competitive.

By Decision 2012/419/EU amending the status of Mayotte with regard to the European Union, the European Council decided that Mayotte would have the status of an outermost region within the meaning of Article 349 TFEU from 1 January 2014, rather than that of an overseas country or territory (OCT) within the meaning of Article 355(2) TFEU. To this end, Mayotte was added to the list of outermost regions in Article 349 TFEU by the above-mentioned European Council Decision. The entire Treaty and all Community tax legislation will therefore be applicable to Mayotte from the date of this change in status.

The proposal for a Council Directive of 7 August 2013 is intended to ensure that Mayotte is treated in the same way as the other French outermost regions with regard to VAT and excise duties, by excluding this overseas department from the territorial scope of the VAT and excise duty directives from 1 January 2014.

The French authorities informed the Commission of their intention to introduce the dock dues tax in Mayotte, under similar conditions to those for Guyana, and requested authorisation from the Commission to apply a differentiated tax system according to whether or not products are produced locally. In their request of 24 May 2013, the French authorities therefore sent the Commission a list of around 100 products for which they were seeking authorisation to apply a differentiated tax system according to whether or not the products are produced locally. The French authorities were asked on several occasions to supply additional information and, for each of the products covered by the request, to provide proof of the existence of local production, the market share held by this local production, and the additional costs of this local production in comparison to the same products produced elsewhere.

• Primary Source

EUR-Lex: COM(2014)24: Follow the progress of this proposal through the decision-making procedure http://eur-lex.europa.eu/legal-content/EN/HIS/?uri=COM:2014:024:FIN

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