France : partial exemption of various taxes for SME's in overseas territories (Zone Franche d'Activités)
On 1 September 2008, the French authorities notified the European Commission the implementation of a new aid regime in overseas territories (DOM) consisting in the creation of free activities zones (ZFA) in order to boost SME's competitiveness in the aforementioned territories.
The beneficiaries of the aid scheme will be allowed significant tax cuts in the following areas: profit taxes (on societies or on industrial and commercial profits), professional taxes and land taxes. 40'000 SME's will potentially benefit from the aid scheme. The yearly budget allowed to the measure amounts 250 million euros. The aid regime will be effective until 31 December 2017.
The commission found that the measure constitutes State aid within the meaning of Article 87(1) of the EC Treaty and gave the following assessment:
The measure is selective since it will be granted only to certain firms located in the DOM, to which it provides an advantage by according tax reliefs, which distorts or threatens to distort competition. The measure is likely to affect trade between Member States since the scheme applies to sectors where intra-community trade exists. (par. 44-45 of of the letter from the EC to France - Brussels, 19.11.2009 C (2009) 8744 final)
The Commission decided not to raise objections since the measure is compatible with the Common Market according to the Article 87(3a) EC Treaty. (par. 96-97 of the letter)
A state measure in the GTA database is assessed solely in terms of the extent to which its implementation affects the extent of discrimination against foreign commercial interests. On this metric, the state aid proposed here is discriminatory.
Any Evidence-Based Deliberation:
|Is there anything in the public record to suggest that evidence of the effectiveness of the proposed measure was considered during official deliberations?|
|Is there any evidence that alternatives to the proposed measure were considered?|
|Is there anything in the public record that suggests that empirical evidence informed the comparison across the alternatives available to government?|
|Was such evidence identified?|
|Is such evidence publicly available?|
|Did the official decision-maker in question provide an explanation as to why a chosen measure was favoured over alternatives?|
|Is there any evidence to suggest that potentially affected trading partners were consulted before the measures were taken?|
|Is there any evidence that safeguards have been put in place to ensure that implementation of the initiative is transparent and non-discriminatory?|
|Did the government state its intention to review the measure within one year of implementation?|
Date of inception: 1 Jan 2009
Duration: 108 months
GTA Evaluation: Red
the letter from the EC to France - Brussels, 19.11.2009 C (2009) 8744 final (french). Available from : < http://ec.europa.eu/competition/elojade/isef/case_details.cfm?proc_code=... >