OTHER TAX INCENTIVES

Law 19/1994, from July 6, modifying the economic and fiscal regime of the Canary Islands contains a set of economic measures - the so-called economic REF - intended to directly compensate for remoteness and insularity. The measures currently included in the Law refer to the following areas: transport and telecommunications; energy and water; commercial promotion; tourism promotion and rehabilitation; employment creation; investment incentives and professional training. The REF includes the following tax incentives and peculiarities:

INVEST IN CANARY ISLANDS

This tax incentive is applicable because of the article 94 of Law 20/1991, in Transitory Provision 4 of Law 19/1994, from July 6 and in the Twelfth Additional Provision of Law 43/1995, of December 28. 

According to these provisions, Companies and other Legal Entities subject to Corporation Tax may avail themselves of the deduction regime provided for Corporation Tax with the following peculiarities provided that the corresponding investments are made and remain in the Archipelago:

» Deduction percentages higher than those applicable in the rest of the national territory (80% of the general regime with a minimum of 20 more percentage points).
» Deductions are limited to a percentage higher than that established for each modality in the common regime (80% of the common regime with a minimum of 35 more percentage points).

In the Canary Islands, the deduction for investment in new tangible fixed assets continues to be in force, since it has now disappeared from the general Corporation Tax regime for the rest of the national territory. This deduction will be 25% of the amount of the investment made, with an independent limit of 50% of the full tax rate (after deductions for double taxation and bonuses). Likewise, the new fixed assets acquired may not be transferred before the expiration of five years from their acquisition. The application of this deduction is also allowed in the acquisition of used fixed assets, provided that they have not previously enjoyed the deduction in the rest of the Spanish territory and they represent an obvious technological improvement for the company.