Madeira Executive Summary
Madeira is well located off the EU and Africa
Madeira
is a small group of islands 1,000 km from Portugal
and the African coast; 314 sq km accommodates
around 240,800 people (February 2006) and many
more tourists in season due to good scenery and
a sub-tropical climate. The capital Funchal has
an international airport well connected to European
cities. The time zone is GMT. Madeira
is part of Portugal and the EU; the language is
Portuguese, although some English is spoken. The
legal system is based on the civil code.
The
Madeiran Government has a good degree of autonomy
from Portugal, but most legislation is Portuguese,
including tax legislation. The economy is based
on tourism, fishing, farming and financial services.
As a peripheral and poorer region of the EU, there
is considerable EU funding to support development,
which can assist inward investment. The currency
is the Euro.
Portuguese taxes are on the high side, given its
rather low level of economic achievement, but
the Portuguese Government, with the agreement
of the EU, created an International Business Centre
on Madeira which until 2001 offered offshore status
and very low taxes to manufacturing, service and
financial companies, as well as a shipping registry.
In late 2002, the EU approved an extension of
the scheme, but this excludes new financial services
companies.
The
Free Trade Zone in the International Business
Centre has been quite successful, unlike some
such ventures. VAT applies in Madeira, although
at a lower than normal rate, and this can be a
positive advantage for some importers into the
EU.
Portugal
has been careful and clever in developing Madeira's
offshore economy. Given that the EU has approved
every stage of the process, Madeira's tax advantages
have faced little threat from the 'harmful tax
practices' initiative. Portugal has 46 double
tax treaties, and these can be used alongside
the International Business Centre to obtain a
very low tax burden for many types of trading
and commercial activity. In addition, Madeira
is covered by the full array of EU legislation
against money-laundering, and is not known to
be a target of criminal activity.
There
were some concerns about the support of the Portuguese
government for the MIBC during 2001, but the government
elected in 2002 was dependent on Madeiran MPs
for its majority. Recently, however, there have
been renewed concerns in Madeira about Portuguese
attitudes.
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