Article 1 
1. By way of derogation from Articles 23, 25 and 90 of the Treaty, the Spanish authorities shall be authorised until 31 December 2011 to lay down, in respect of products listed in the Annex that are produced locally in the Canary Islands, total exemptions from or partial reductions of the tax known as "Arbitrio sobre las Importaciones y Entregas de Mercancías en las islas Canarias (AIEM)". These exemptions must form part of the strategy for economic and social development of the Canary Islands and contribute to the promotion of local activities. 2. Application of the total exemptions or reductions referred to in paragraph 1 may not lead to differences in excess of: (a) 5 % for the products listed in the Annex, Section A; (b) 15 % for the products listed in the Annex, Section B; (c) 25 % for the products listed in the Annex, section C. Nevertheless, the Spanish authorities may establish a minimum tax on cigarettes of not more than EUR 6 per 1000 cigarettes, applicable only if the AIEM tax resulting from the application of general types of taxation is below this figure. Article 2 The Spanish authorities shall present to the Commission at the latest by 31 December 2005 a report on the application of the arrangements referred to in Article 1, in order to check the impact of the measures taken and their contribution to the promotion or maintenance of local economic activities, account being taken of handicaps affecting the outermost regions. On this basis, the Commission shall present a report to the Council comprising a full analysis of the economic and social aspects and where appropriate a proposal for adapting the provisions of this Decision. Article 3 This Decision shall be applicable from 1 January 2002. Article 4 This Decision is addressed to the Kingdom of Spain. Done at Madrid, 20 June 2002. For the Council The President R. De Rato Y Figaredo (1) OJ C 75 E, 26.3.2002, p. 328. (2) Opinion delivered on 13 June 2002 (not yet published in the Official Journal). (3) OJ L 171, 29.6.1991. Regulation as last amended by Regulation (EC) No 1105/2001 (OJ L 151, 7.6.2001, p. 1). (4) OJ L 326, 18.12.1999, p. 3.
Amendment rationale: CONTEXT OF THE PROPOSAL The Treaty on the Functioning of the European Union (TFEU), which applies to the outermost regions of the EU, which include the Canary Islands, does not in principle allow any difference between the taxation of local products and the taxation of products from Spain or other Member States. Article 349 of the TFEU (formerly Article 299(2) of the EC Treaty) provides, however, 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 2002/546/EC of 20 June 2002[1], adopted on the basis of Article 299(2) of the EC Treaty, authorises Spain, up to 31 December 2011, to apply exemptions from or reductions in the tax known as AIEM to certain products produced locally in the Canary Islands. The Annex to that Decision contains a list of 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 5, 15 or 25 percentage points, depending on the product. Decision 2002/546/EC sets out the reasons for adopting specific measures, which include isolation, raw material and energy dependence, the obligation to build up stocks, the small size of the local market and the low level of export activity. 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 goods produced elsewhere, even taking into account the cost of transporting the latter to the Canary Islands. This would make it harder to maintain local production. The specific measures contained in Decision 2002/546/EC were thus designed to strengthen local industry by making it more competitive. The global economic crisis of 2009, with its impact in the reduction of travelling, had severe consequences on the economy of Canary Islands, highly dependent on the revenues from tourism. The reduction of working force in the tourism sector has led to a major increase in the unemployment rate in Canary Islands. The unemployment rate that in the period of 2001-2007 oscillated between 10,4% and 12%, rose to 17,3% in 2008 and 26,2% in 2009. This evolution confirms the danger of an economy highly dependent on tourism and the need to promote a diversification in the economic activities. On 16 November 2010, Spain submitted a request to the European Commission to extend the period of application of Decision 2002/546/EC for two years, so that its expiry date coincides with the one of the Guidelines on National Regional Aid for 2007-2013.[2] Spain has also introduced a request for the extension for two years of the period of application of Decision on State Aid NN 22/2008, according to which the aid given by the Spanish authorities, in respect of AIEM, is compatible with the common market. The Commission has drafted the Decision of State Aid N 544/2010, extending the period of Decision on State Aid NN 22/2008, that is ready to be adopted, ensuring the coherence with this proposal. As regard the request for the extension of the period of application of Decision 2002/546/EC, the Commission has assessed it in light of the scale of the handicaps affecting the Canary Islands. It has come to the conclusion that it is justified to grant the request on the basis of the available elements. First, indeed, the report from the Commission to the Council on the application of the special arrangements concerning the AIEM tax applicable in the Canary Islands, adopted on 28 August 2008, confirmed that the AIEM was functioning in a satisfactory manner and without the need to any amendments to the provisions of Decision 2002/546/EC. The continued existence of the handicaps is also confirmed by the report sent with the present request for extending the period of application of Decision 2002/546/EC. Second, the the request seeks an extension for two years only.
Revised version (Article 1 ):
1. By way of derogation from Articles 23, 25 and 90 of the Treaty, the Spanish authorities shall be authorised until 31 December 2013 to lay down, in respect of products listed in the Annex that are produced locally in the Canary Islands, total exemptions from or partial reductions of the tax known as ‘Arbitrio sobre las Importaciones y Entregas de Mercancías en las islas Canarias (AIEM)’. These exemptions must form part of the strategy for economic and social development of the Canary Islands and contribute to the promotion of local activities. 2. Application of the total exemptions or reductions referred to in paragraph 1 may not lead to differences in excess of: (a) 5 % for the products listed in the Annex, Section A; (b) 15 % for the products listed in the Annex, Section B; (c) 25 % for the products listed in the Annex, section C. Nevertheless, the Spanish authorities may establish a minimum tax on cigarettes of not more than EUR 6 per 1 000 cigarettes, applicable only if the AIEM tax resulting from the application of general types of taxation is below this figure.
Article 2 
The Spanish authorities shall present to the Commission at the latest by 31 December 2005 a report on the application of the arrangements referred to in Article 1, in order to check the impact of the measures taken and their contribution to the promotion or maintenance of local economic activities, account being taken of handicaps affecting the outermost regions. On this basis, the Commission shall present a report to the Council comprising a full analysis of the economic and social aspects and where appropriate a proposal for adapting the provisions of this Decision. Article 3 This Decision shall be applicable from 1 January 2002. Article 4 This Decision is addressed to the Kingdom of Spain. Done at Madrid, 20 June 2002. For the Council The President R. De Rato Y Figaredo (1) OJ C 75 E, 26.3.2002, p. 328. (2) Opinion delivered on 13 June 2002 (not yet published in the Official Journal). (3) OJ L 171, 29.6.1991. Regulation as last amended by Regulation (EC) No 1105/2001 (OJ L 151, 7.6.2001, p. 1). (4) OJ L 326, 18.12.1999, p. 3.
Amendment rationale: CONTEXT OF THE PROPOSAL The Treaty on the Functioning of the European Union (TFEU), which applies to the outermost regions of the EU, which include the Canary Islands, does not in principle allow any difference between the taxation of local products and the taxation of products from Spain or other Member States. Article 349 of the TFEU (formerly Article 299(2) of the EC Treaty) provides, however, 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 2002/546/EC of 20 June 2002[1], adopted on the basis of Article 299(2) of the EC Treaty, authorises Spain, up to 31 December 2011, to apply exemptions from or reductions in the tax known as AIEM to certain products produced locally in the Canary Islands. The Annex to that Decision contains a list of 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 5, 15 or 25 percentage points, depending on the product. Decision 2002/546/EC sets out the reasons for adopting specific measures, which include isolation, raw material and energy dependence, the obligation to build up stocks, the small size of the local market and the low level of export activity. 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 goods produced elsewhere, even taking into account the cost of transporting the latter to the Canary Islands. This would make it harder to maintain local production. The specific measures contained in Decision 2002/546/EC were thus designed to strengthen local industry by making it more competitive. The global economic crisis of 2009, with its impact in the reduction of travelling, had severe consequences on the economy of Canary Islands, highly dependent on the revenues from tourism. The reduction of working force in the tourism sector has led to a major increase in the unemployment rate in Canary Islands. The unemployment rate that in the period of 2001-2007 oscillated between 10,4% and 12%, rose to 17,3% in 2008 and 26,2% in 2009. This evolution confirms the danger of an economy highly dependent on tourism and the need to promote a diversification in the economic activities. On 16 November 2010, Spain submitted a request to the European Commission to extend the period of application of Decision 2002/546/EC for two years, so that its expiry date coincides with the one of the Guidelines on National Regional Aid for 2007-2013.[2] Spain has also introduced a request for the extension for two years of the period of application of Decision on State Aid NN 22/2008, according to which the aid given by the Spanish authorities, in respect of AIEM, is compatible with the common market. The Commission has drafted the Decision of State Aid N 544/2010, extending the period of Decision on State Aid NN 22/2008, that is ready to be adopted, ensuring the coherence with this proposal. As regard the request for the extension of the period of application of Decision 2002/546/EC, the Commission has assessed it in light of the scale of the handicaps affecting the Canary Islands. It has come to the conclusion that it is justified to grant the request on the basis of the available elements. First, indeed, the report from the Commission to the Council on the application of the special arrangements concerning the AIEM tax applicable in the Canary Islands, adopted on 28 August 2008, confirmed that the AIEM was functioning in a satisfactory manner and without the need to any amendments to the provisions of Decision 2002/546/EC. The continued existence of the handicaps is also confirmed by the report sent with the present request for extending the period of application of Decision 2002/546/EC. Second, the the request seeks an extension for two years only.
Revised version (Article 2 ):
The Spanish authorities shall present to the Commission at the latest by 31 December 2005 a report on the application of the arrangements referred to in Article 1, in order to check the impact of the measures taken and their contribution to the promotion or maintenance of local economic activities, account being taken of handicaps affecting the outermost regions. On this basis, the Commission shall present a report to the Council comprising a full analysis of the economic and social aspects and where appropriate a proposal for adapting the provisions of this Decision.
Article 3 
This Decision shall be applicable from 1 January 2002. Article 4 This Decision is addressed to the Kingdom of Spain. Done at Madrid, 20 June 2002. For the Council The President R. De Rato Y Figaredo (1) OJ C 75 E, 26.3.2002, p. 328. (2) Opinion delivered on 13 June 2002 (not yet published in the Official Journal). (3) OJ L 171, 29.6.1991. Regulation as last amended by Regulation (EC) No 1105/2001 (OJ L 151, 7.6.2001, p. 1). (4) OJ L 326, 18.12.1999, p. 3.
Amendment rationale: CONTEXT OF THE PROPOSAL The Treaty on the Functioning of the European Union (TFEU), which applies to the outermost regions of the EU, which include the Canary Islands, does not in principle allow any difference between the taxation of local products and the taxation of products from Spain or other Member States. Article 349 of the TFEU (formerly Article 299(2) of the EC Treaty) provides, however, 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 2002/546/EC of 20 June 2002[1], adopted on the basis of Article 299(2) of the EC Treaty, authorises Spain, up to 31 December 2011, to apply exemptions from or reductions in the tax known as AIEM to certain products produced locally in the Canary Islands. The Annex to that Decision contains a list of 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 5, 15 or 25 percentage points, depending on the product. Decision 2002/546/EC sets out the reasons for adopting specific measures, which include isolation, raw material and energy dependence, the obligation to build up stocks, the small size of the local market and the low level of export activity. 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 goods produced elsewhere, even taking into account the cost of transporting the latter to the Canary Islands. This would make it harder to maintain local production. The specific measures contained in Decision 2002/546/EC were thus designed to strengthen local industry by making it more competitive. The global economic crisis of 2009, with its impact in the reduction of travelling, had severe consequences on the economy of Canary Islands, highly dependent on the revenues from tourism. The reduction of working force in the tourism sector has led to a major increase in the unemployment rate in Canary Islands. The unemployment rate that in the period of 2001-2007 oscillated between 10,4% and 12%, rose to 17,3% in 2008 and 26,2% in 2009. This evolution confirms the danger of an economy highly dependent on tourism and the need to promote a diversification in the economic activities. On 16 November 2010, Spain submitted a request to the European Commission to extend the period of application of Decision 2002/546/EC for two years, so that its expiry date coincides with the one of the Guidelines on National Regional Aid for 2007-2013.[2] Spain has also introduced a request for the extension for two years of the period of application of Decision on State Aid NN 22/2008, according to which the aid given by the Spanish authorities, in respect of AIEM, is compatible with the common market. The Commission has drafted the Decision of State Aid N 544/2010, extending the period of Decision on State Aid NN 22/2008, that is ready to be adopted, ensuring the coherence with this proposal. As regard the request for the extension of the period of application of Decision 2002/546/EC, the Commission has assessed it in light of the scale of the handicaps affecting the Canary Islands. It has come to the conclusion that it is justified to grant the request on the basis of the available elements. First, indeed, the report from the Commission to the Council on the application of the special arrangements concerning the AIEM tax applicable in the Canary Islands, adopted on 28 August 2008, confirmed that the AIEM was functioning in a satisfactory manner and without the need to any amendments to the provisions of Decision 2002/546/EC. The continued existence of the handicaps is also confirmed by the report sent with the present request for extending the period of application of Decision 2002/546/EC. Second, the the request seeks an extension for two years only.
Revised version (Article 3 ):
This Decision shall be applicable from 1 January 2002.
Article 4 
This Decision is addressed to the Kingdom of Spain. Done at Madrid, 20 June 2002
Amendment rationale: CONTEXT OF THE PROPOSAL The Treaty on the Functioning of the European Union (TFEU), which applies to the outermost regions of the EU, which include the Canary Islands, does not in principle allow any difference between the taxation of local products and the taxation of products from Spain or other Member States. Article 349 of the TFEU (formerly Article 299(2) of the EC Treaty) provides, however, 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 2002/546/EC of 20 June 2002[1], adopted on the basis of Article 299(2) of the EC Treaty, authorises Spain, up to 31 December 2011, to apply exemptions from or reductions in the tax known as AIEM to certain products produced locally in the Canary Islands. The Annex to that Decision contains a list of 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 5, 15 or 25 percentage points, depending on the product. Decision 2002/546/EC sets out the reasons for adopting specific measures, which include isolation, raw material and energy dependence, the obligation to build up stocks, the small size of the local market and the low level of export activity. 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 goods produced elsewhere, even taking into account the cost of transporting the latter to the Canary Islands. This would make it harder to maintain local production. The specific measures contained in Decision 2002/546/EC were thus designed to strengthen local industry by making it more competitive. The global economic crisis of 2009, with its impact in the reduction of travelling, had severe consequences on the economy of Canary Islands, highly dependent on the revenues from tourism. The reduction of working force in the tourism sector has led to a major increase in the unemployment rate in Canary Islands. The unemployment rate that in the period of 2001-2007 oscillated between 10,4% and 12%, rose to 17,3% in 2008 and 26,2% in 2009. This evolution confirms the danger of an economy highly dependent on tourism and the need to promote a diversification in the economic activities. On 16 November 2010, Spain submitted a request to the European Commission to extend the period of application of Decision 2002/546/EC for two years, so that its expiry date coincides with the one of the Guidelines on National Regional Aid for 2007-2013.[2] Spain has also introduced a request for the extension for two years of the period of application of Decision on State Aid NN 22/2008, according to which the aid given by the Spanish authorities, in respect of AIEM, is compatible with the common market. The Commission has drafted the Decision of State Aid N 544/2010, extending the period of Decision on State Aid NN 22/2008, that is ready to be adopted, ensuring the coherence with this proposal. As regard the request for the extension of the period of application of Decision 2002/546/EC, the Commission has assessed it in light of the scale of the handicaps affecting the Canary Islands. It has come to the conclusion that it is justified to grant the request on the basis of the available elements. First, indeed, the report from the Commission to the Council on the application of the special arrangements concerning the AIEM tax applicable in the Canary Islands, adopted on 28 August 2008, confirmed that the AIEM was functioning in a satisfactory manner and without the need to any amendments to the provisions of Decision 2002/546/EC. The continued existence of the handicaps is also confirmed by the report sent with the present request for extending the period of application of Decision 2002/546/EC. Second, the the request seeks an extension for two years only.
Revised version (Article 4 ):
This Decision is addressed to the Kingdom of Spain.