Incentives
Historically the Canary Islands have always exercised a differentiated economic and fiscal treatment to make up for the effect of the condition of being an island and their geographic distance.
The Spanish joining to the UE involved a modernization of such an economic singularity, reflected in the new bases of the Economic and Fiscal Regime of the Canary Islands (REF), born in 1972, that keeps the islands in exceptional conditions for trade and investment. The REF has a group of fiscal incentives related to create an industrial activity development, gathered in the Spanish regulations and authorized by the UE institutions.
The fiscal incentives that the REF presents, which are helping to generate a society of knowledge and to diversify the economy (with sectors like biotechnology and biomedicine, CIT…) are basically the following:
The named Canary Islands Special Zone (ZEC), thanks to it you are able to pay up to 4% of the Corporate Income Tax (in the rest of Spain is 32.5% in 2007, and 30% in 2008), that means that the autonomous region is not just an ideal tourist destination, but also a tax zone highly attractive for investment.
The Canarian Investment Reserve (RIC), born with the aim to stimulate the industrial investment effort in the Canary Islands. This fiscal mechanism allows to reduce the income taxes in the Corporate Income Tax up to the 90% of the non-distributed benefits (before taxes) to companies, permanent establishment and legal entities that assign a special reserve dedicated to the investment in assets localized in the Canary Islands and that promise to carry out future investments in the isles.
In addition there are, included in the REF, Free Trade Zones where you can store, transform and distribute merchandise without burden, customs duty or indirect taxes. The enterprises installed in the canarian free trade zone can also receive the rest of the REF benefits.
Discount to the Production of Corporal Goods, with the aim to promote the productive activities in the Archipelago.
Finally, we shall point out that the Canary Islands are included in the European customs territory and that, although in the archipelago the common I.V.A. and any of the other specials taxes in the EU are not applied, we have the I.G.I.C., the Canarian indirect tax with a rate of taxation of 5%, much smaller than the I.V.A. though.
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