Proposal for a COUNCIL DECISION amending Decision 2004/162/EC with regard to its implementation in Mayotte from 1 January 2014
Date: 2014-01-24
Institutions: European Commission
Subjects: French overseas department and region, Mayotte, VAT, excise duty, peripheral region, tax exemption













EUR-Lex - 52014PC0024 - EN











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52014PC0024

Proposal for a COUNCIL DECISION amending Decision 2004/162/EC with regard to its implementation in Mayotte from 1 January 2014 /* COM/2014/024 final - 2014/0010 (CNS) */









EXPLANATORY MEMORANDUM
1.           CONTEXT OF THE PROPOSAL
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[1]
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.
2.           RESULTS OF CONSULTATIONS
WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS
The French authorities' request concerning Mayotte was a response to requests from the economic sectors concerned.
The Commission has not used an impact
assessment.
3.           LEGAL ELEMENTS OF THE
PROPOSAL
 Summary of the proposed measures The purpose of the proposal is to amend Council Decision 2004/162/EC in order to make it applicable to Mayotte. It also determines the lists of products in Mayotte for which France will be authorised to apply, within certain limits, exemptions or reductions in dock dues for particular products produced locally. The proposal makes provision for authorising the application of a differentiated tax system for 59 products produced locally in Mayotte. For all these products the French authorities were able to prove: firstly, the existence of local production; secondly, the existence of substantial imports (including from metropolitan France and other Member States) which could jeopardise the continuation of local production; and thirdly, the existence of additional costs relating to local production compared with 'imported' products, which compromise the competitiveness of locally produced products. The authorised tax differential must not exceed the proven additional costs. There are 11 products proposed for inclusion in Part A of the Annex to Council Decision 2004/162/EC (authorised tax differential of 10 percentage points), 32 products for inclusion in Part B (authorised tax differential of 20 percentage points), and 16 products for Part C (authorised tax differential of 30 percentage points). Details of the products concerned are given in recitals 5 to 7 of the proposal for a Council Decision. 
 Legal basis Article 349 TFEU. 
 Principle of subsidiarity Only the Council is authorised, on the basis of Article 349 TFEU, to adopt specific measures in favour of the outermost regions to adjust the application of the Treaties to those regions, including the common policies, because of the permanent handicaps which affect the economic and social conditions of the outermost regions. The proposal therefore complies with the principle of subsidiarity. 
 Principle of proportionality The proposal complies with the principle of proportionality for the reasons below. 
 The purpose of the Proposal is to amend Decision 2004/162/EC in order to make it applicable to Mayotte. It concerns only products for which evidence of the additional costs incurred by locally produced products has been provided. || 
 Similarly, the maximum differential proposed for each product covered by this proposal is limited to what is necessary in view of the additional costs affecting the local production concerned in each case. In this way, the tax burden on products imported into the French overseas department of Mayotte will not exceed what is necessary to offset the lower competitiveness of products produced locally. 
 Choice of instrument 
 Proposed instrument: Council decision. 
 Other instruments would not have been appropriate for the following reasons: The text to be amended is itself a Council Decision, adopted on the same legal basis (Article 299(2) of the EC Treaty at the time). 
4.           BUDGETARY IMPACT
The proposal has no impact on the European
Union budget.
2014/0010 (CNS)
Proposal for a
COUNCIL DECISION
amending Decision 2004/162/EC with
regard to its implementation in Mayotte from 1 January 2014
THE COUNCIL OF THE EUROPEAN UNION,
Having regard to the Treaty on the
Functioning of the European Union, and in particular Article 349 thereof,
Having regard to the proposal from the
European Commission,
After transmission of the draft legislative
act to the national parliaments,
Having regard to the opinion of the European
Parliament[2],
Acting in accordance with a special
legislative procedure,
Whereas:
(1)       Council
Decision 2004/162/EC[3]
authorises the French authorities to apply exemptions or reductions to dock
dues for products produced locally in the French overseas departments and
listed in the Annex to the Decision. These exemptions or reductions constitute
specific measures designed to offset the specific constraints facing the
outermost regions which increase production costs for local companies and make
it difficult for their products to compete with the same products imported from
metropolitan France and other Member States. Mayotte's situation is the same as
that of the other French outermost regions.
(2)       In accordance with
Decision 2012/419/EU[4],
with effect from 1 January 2014 Mayotte will become an outermost
region within the meaning of Article 349 of the Treaty. All provisions of
the Treaty will thus be applicable to Mayotte from this date.
(3)       The French authorities
have asked for Decision 2004/162/EC concerning dock dues to be applicable
to Mayotte with effect from 1 January 2014, and have submitted a list
of the products to which they wish to apply differentiated taxation according
to whether or not the products are produced locally.
(4)       This Decision should authorise
the French authorities to apply differentiated taxation to the products for
which they have proven: firstly, that local production exists; secondly, that
significant importation of goods (including from metropolitan France and other
Member States) could jeopardise the continuation of local production; and
thirdly, that additional costs exist which increase the cost price of local
production in comparison with products produced elsewhere, compromising the
competitiveness of products produced locally. The authorised tax differential
should not exceed the proven additional costs. Applying these principles will
allow the provisions of Article 349 of the Treaty to be implemented
without going beyond what is necessary and without creating an unjustified advantage
for local production.
(5)       The products for which the
French authorities have provided these three types of proof are listed in
Parts A, B and C of the Annex to Council Decision 2004/162/EC. The
products concerned that are listed in Part A of the Annex to the Decision
(authorised tax differential of 10 percentage points) are pepper (products
0904 11 and 0904 12[5]),
vanilla (0905), chocolate (1806), certain plastic products
(3925 10 10, 3925 90 80, 3926 90 90 and
3926 90 97), bricks (6901 and 6902) and dental prostheses
(9021 21 90).
(6)       The products concerned
listed in Part B of the Annex (authorised tax differential of 20 percentage
points) are fish (products 0301, 0302, 0303, 0304 and 0305), certain wood
articles (4407, 4409, 4414, 4418, 4419, 4420 and 4421), certain paperboard and
paper articles (4819 and 4821), certain products from the press and publishing
sector (4902, 4909, 4910 and 4911), certain flat glass products (7003 and
7005), certain iron articles (7210, 7301, 7312, 7314, 9406 00 31 and 9406 00 38),
certain aluminium articles (7606, 7610 10 and 8310), and certain seats
(9401 69, 9401 90 30 and 9403 40).
(7)       The products concerned
listed in Part C of the Annex (authorised tax differential of 30 percentage
points) are milk and dairy products (0401, 0403 and 0406), certain meat-based
processed products (1601 and 1602), certain bakery products
(1901 and 1905), ice-creams (2105), mineral water and sodas (2201 and
2202), beer (2203), ylang-ylang (3301 29 11 and
3301 29 31), soaps and detergents (3401 and 3402) and foam
mattresses (9404 29 90).
(8)       Decision 2004/162/EC
should therefore be amended accordingly.
(9)       Given the urgency, an
exception should be made to the eight-week period laid down by Article 4
of Protocol No 1 on the role of national parliaments in the European Union,
HAS ADOPTED THIS DECISION:
Article 1
Decision 2004/162/EC is amended as
follows:
1) the first subparagraph of
Article 1(1) is replaced by the following:
'By way of derogation from
Articles 28, 30 and 110 of the Treaty on the Functioning of the European
Union, the French authorities shall be authorised, until 1 July 2014,
to apply exemptions or reductions to the dock dues tax for the products listed
in the Annex which are produced locally in the French overseas departments of
Guadeloupe, Guyana, Martinique, Mayotte and Réunion.'
2) The Annex is amended as follows:
a) the following point 5 is added to
Part A:
'5. Department of Mayotte
0904 11, 0904 12, 0905, 1806,
3925 10 00, 3925 90 80, 3926 90 90,
3926 90 97, 6901, 6902, 9021 21 90.'
b) the following point 5 is added to
Part B:
'5. Department of Mayotte
0301, 0302, 0303, 0304, 0305, 4407, 4409, 4414,
4418, 4419, 4420, 4421, 4819, 4821, 4902, 4909, 4910, 4911, 7003, 7005, 7210,
7301, 7312, 7314, 7606, 7610 10, 8310, 9401 69, 9401 90 30,
9403 40, 9406 00 31, 9406 00 38.'
c) the following point 5 is added to
Part C:
'5. Department of Mayotte
0401, 0403, 0406, 1601, 1602, 1901, 1905, 2105,
2201, 2202, 2203, 3301 29 11, 3301 29 31, 3401, 3402,
9404 29 90.'
Article 2
This
Decision shall apply with effect from 1 January 2014.
Article 3
This
Decision is addressed to the French Republic.
Done at Brussels,
                                                                       For
the Council
                                                                       The
President
[1]               Proposal for a Council Directive amending
Directives 2006/112/EC and 2008/118/EC as regards the French outermost
regions and Mayotte in particular (COM(2013) 577 final).
[2]               OJ C , , p. .
[3]               Council Decision 2004/162/EC of
10 February 2004 concerning the dock dues in the French overseas departments
and extending the period of validity of Decision 89/688/EEC (OJ L 52,
21.2.2004, p. 64).
[4]               OJ L 204,
31.7.2012, p. 131.
[5]               According to the classification of the Common Customs
Tariff nomenclature.