Trade and the Environment

Renewable energy tax incentives and WTO law: irreconcilably incompatible? : an examination of the WTO-consistency of direct corporate tax incentives for the development of renewable energy

“…Such market imperfections include tax incentives, tax and duty exemptions and subsidies. 120 The mere displacement of electricity generation away from political influence and the corruption 121 associated with State controlled monopolies and general anti-competitive behaviour characteristic of monopolies, creates an environment in which not only economic benefits may be passed on to the consumer but also in which market imperfections may be detected and eliminated. 122 In the hands of private operators, obligations to produce transparent accounts and be answerable to shareholders makes efficiency an important goal, and hidden subsidies, hopefully, a thing of the past.…”

“…120 The incentive was introduced in Article 3.42 of the Income Tax Code to stimulate investments in energy saving business assets. 121 Although this incentive somewhat overlaps and applies concurrently with the existing general investment deduction, it increased the threshold value of investments and the deduction percentages are also higher than those of the general investment incentive. 122 This incentive could be used in addition to the free depreciation incentive (VAMIL).…”

“…120 The Panel in US -Softwood Lumber IV described the pass-through situation as follows: "[w]here the subsidies at issue are received by someone other than the producer of the investigated product, the question arises whether there is subsidization in respect of that product." 121 In this case, the subsidies are received by the investors, being someone other than the producer of the investigated product (renewable electricity), with the resulting question whether there has been indirect subsidisation of renewable electricity. Has the renewable energy project benefited from the tax subsidy provided to the investor?…”

“…The only obligation for the financial institutions laid out in the Green Funds Decree 139 is that (a) they must provide loans to the green projects 140 and (b) this investment must be equal to a minimum of 70% of funds from investors under the Green Funds scheme. 141 The financial institution must also ask for certification that the project being financed is a 'green project'. Once the financial institution receives this certification it may 142 provide a loan to the said project.…”

“…The current budget allowed for MIA investment deductions in 2009 is a maximum of €89 million. 141 The budget has consistently been increased, by applications for approval from the Commission from the €18 million which was allowed in 1999.…”