The recent decision by the European Commission in relation to Madeira should provide further support for a separate tax system for Northern Ireland. The European Commission has approved under state aid rules a scheme providing tax reductions until 2020 to companies setting up in the free zone of Madeira between 2007 and 2013. The granting of the aid is subject to requirements to create jobs and strict safeguards as to the implementation of the aid.

The Commission was satisfied that the aid was intended to promote regional development in Madeira by enabling companies established in this outermost region to overcome their structural handicaps.

While Madeira, being an outermost region, qualifies as a disadvantaged area under art 87 (3) (a) of the EC treaty; Northern Ireland, being relatively less disadvantaged, still qualifies for relief, albeit for a reduced amount, under art. 87 (3) (c) of the EC treaty.

Further information on the Madeira decision is available at http://europa.eu/rapid/pressReleasesAction.do?reference=IP/07/891&format=HTML&aged=0&language=EN&guiLanguage=en.