EN Official Journal of the European Union CE 33/41

(2004/C 33 E/039)

WRITTEN QUESTION P-0442/03

by Luciano Caveri (ELDR) to the Commission

(12 February 2003)

Subject: Business Tax

Italian shipping companies working with the People's Republic of China are obliged to pay Business Tax, a levy on the provision of services, at a rate of 3 % of locally produced turnover for transport and communications. The Agreement on Sea Transport between Italy and China of 8 October 1972 only covers tax on revenue and makes no provision for Business Tax, nor does the Protocol of 3 June 2002 amending the Agreement. Similarly, the Agreement between Italy and China against double taxation of 31 October 1986 only refers to direct taxation.

Shipping companies of other EU countries working with the People's Republic are not subject to Business Tax, since the relevant shipping and/or bilateral agreements provide for an exemption. The only exceptions, apart from Italy, are Spain, Austria and Luxembourg, which do not have any substantial shipping traffic with China.

The shipping companies of the People's Republic currently operating in Italy are not subject to any kind of levy comparable or similar to the Business Tax.

This situation creates a substantial disparity in treatment between European Union companies, giving rise to a blatant violation of the principles of free competition and equality of treatment between the Member States.

In order to remedy this situation, which causes an unintentional but nevertheless real discrimination between Member States, the Italian Government some time ago asked the Chinese authorities to amend the existing shipping agreements. So far the Chinese government has shown no real willingness to do so.

Can the Commission say:

1. how it interprets this situation, which creates a real disparity in treatment between the Member States;

2. whether it considers that it should take steps to put an end to this situation;

3. what measures it will take in this context?

Answer given by Mr Lamy on behalf of the Commission

(31 March 2003)

The Commission does not have any additional information on the matter raised by the Honourable Member concerning the business tax paid by Italian shipping companies working in the People's Republic of China. The Agreement on Sea Transport between Italy and China does not appear to include the relevant provisions on the business tax, whereas such provisions are foundin the aggreements that other Member States have concluded with China.

Agreements on double taxation are normally exempted from the Most Favoured Nations (MFN) obligation of the GATS agreement (General Agreement on Trade in Services). Article XIV of the GATS allows for measures that are inconsistent with Article II (the MFN principle), provided that the difference in treatment is the result of an agreement on the avoidance of double taxation or provisions on the avoidance of double taxation in any other international agreement or arrangement by which the Member is bound.

The ‘business tax’ issue is also exempted from the recently signed EU — China Maritime Agreement. In particular Article 2 (Scope), paragraphe 2 states that the agreement shall not affect the application of the bilateral maritime agreements concluded between China and the member States of the Community for issues not falling within the scope of the agreement.

The responsible Commission Services are in close contact with the respective National Administrations of Member States and with shipping industry representatives and associations in order to ensure the early ratification as well as the accurate implementation of the EU-China Maritime Agreement to the benefit of the European shipping industry.