What is the ‘octroi de mer’ and what will be after the reform

The Commission proposes exemptions from the island tax for 84 new products from the French outermost regions

Léalo en español

THE STRATEGY of the European Commission for the outermost regions promotes interventions tailored to each territory. The review of the octroi of mer -or dock dues in the French overseas territories- responds to this approach. The commissioner Pierre Moscovici – Economic and Financial Affairs, Taxation and Customs – announced this December 13 changes that will extend the exemptions of the arbitration to 84 new products of Guadeloupe, Guyane, Martinique and La Réunion.

What is the octroi de mer? What is the adjustment proposed by the Commission? Serve the following approach in the form of questions and answers.

What is known as «octroi de mer»?

It is a very old tax –with centuries of history behind– specific to the French overseas territories. «Octroi de mer» is translated as «dock dues», because, originally, it taxed the imported products by ship to the DOM –or overseas territories.

What is its purpose?

Protect local products against imported equivalent products.

But are not differences in taxation contrary to the EU Treaties?

In principle, the customs union do not allow for differences between the taxes that are applied to local products and those that are levied on products imported from any member state of the European Union. However, the Treaty of Functioning, in its article 349, also recognizes the uniqueness of the outermost regions due to their remoteness and isolation, conditions that are assumed to be restrictive of their convergence with the average standard of living in the EU. The «octroi de mer» is part of the regime of exceptions and specific modulations of EU policies in the outermost regions.

How is octroi de mer applied?

Its functioning is currently governed by Council Decision 940/2014 of December 17, 2014. In short, the EU authorizes France to apply exemptions or reductions in the price of goods to a list of products included in the Annex to Decision , manufactured locally in Guadeloupe, Guyane, Martinique, Mayotte and Réunion. The difference between the tax rates applied to local products and those imposed on imported products must not exceed 10, 20 or 30 percentage points, depending on the category of each product in the list. Local producers who operate for less than 300,000 euros a year will not be subject, in any case, to the payment of the insular tax. France is obliged to submit a report halfway through the life cycle of the exemptions –the current period ends in 2020– on the application of the tax regime and its repercussions on local economies.

Why are some products exempt, and not others?

The purpose of this tax is to protect «sensitive» productions because of their impact on the local economy. The exemption, in theory, should prepare them to compete better with imported equivalent products. Based on these principles, the preparation of the list of products is more or less discretionary and responds, like most political decisions, to the coalitions of interests that are formed in each local community between politicians and producers.

What about the octroi de mer reform?

The Commission proposal adds 84 new products to the regime of exemptions and reduced tariffs of the octroi de mer. The list has not been made public, but when announcing the proposal, Commissioner Moscovici mentioned «certain fruits and vegetables from Guadeloupe and Martinique, and certain wooden furniture in Guyane» among the products that will be exempt from paying the tax. For «some fertilizers from Guadeloupe and certain paints and varnishes from La Réunion», the Commission proposes «differences in tax levels between locally produced and imported goods».

The new list has been elaborated in consultations of the French Government with the Regional Councils of Guadeloupe and Reunion, the assembly of Guyane, the assembly of Martinique and the local operators, according to this Friday December 14 the Ministry of Overseas Affairs, under the direction from the Minister Annick Girardin.

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