Council Decision (EU) 2020/1791 of 16 November 2020 authorising France to apply a reduced rate of certain indirect taxes on ‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique and Réunion

What it is

to authorise France to apply, for certain indirect taxes, a reduced rate to ‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique and Réunion. ROLE OF THE EUROPEAN PARLIAMENT: the Council adopts the act after consulting the European Parliament but without being obliged to follow its opinion. BACKGROUND: the current Council Decision No 189/2014/EU authorises France to apply a reduced rate of certain indirect taxes to traditional rum produced in the French outermost regions of Guadeloupe, French Guiana, Martinique and Réunion when it is transported to mainland France for consumption. The reduction in the indirect taxes may not exceed 50% of the French standard excise duty on alcohol and is limited to an annual quota of 144 000 hectolitres of pure alcohol. The derogation expires on 31 December 2020. The aim of this regime is to compensate for the higher production cost of traditional rum in the French outermost regions and guarantee market access to the French mainland, which is their main market outlet. The European Parliament adopted by 680 votes to 5, with 4 abstentions, (following a special legislative procedure - consultation), a legislative resolution on the proposal for a Council decision authorising France to apply a reduced rate of certain indirect taxes on 'traditional' rum produced in Guadeloupe, French Guiana, Martinique and Réunion. Parliament approved the Commission's proposal without amendment. The proposal provides for the application of specific measures on rum taxation for the entire duration of the next multiannual financial framework, which will run from 2021 to 2027. This derogation from the tax rules is justified by the economic difficulties inherent in production in the outermost regions. - authorises France to reduce the excise duty and the social security contribution on ‘traditional’ rum produced in Guadeloupe, French Guiana, Martinique and Réunion and sold in mainland France, up to a limit of 50% of the standard rate; - defines the rum covered by the derogation: it must have an alcoholic strength of at least 40% and the cane sugar used as a raw material must be of local origin; - fixes at 153 000 hectolitres of pure alcohol per year the quantities of rum originating in the overseas departments eligible for this derogation; - obliges France to submit reports on the implementation and impact of the derogation.

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