B. Deduction for investments in West African territories and for propaganda and advertising expenses

Regulations: article 27 bis of Law 19/1994, of July 6, modifying the Economic and Fiscal Regime of the Canary Islands

Includes two deductions:

1. Deduction for investments in West African territories

It is applicable to taxpayers who carry out economic activities in the Canary Islands when they make investments aimed at establishing subsidiaries or permanent establishments in Morocco, Mauritania, Senegal, Gambia, Guinea Bissau and Cape Verde.

a) Percentages of the deduction :

15% of the investments in the event that the net amount of the turnover in the immediately preceding tax period is equal to or less than 10 million euros and with an average workforce in said period of less than 50 people.

If the immediately preceding tax period had a duration of less than one year, or the activity had been carried out for a shorter period, the net amount of the turnover will be increased to one year.

b) Requirements for the application of the deduction:

• Subsidiaries or permanent establishments established in Morocco, Mauritania, Senegal, Gambia, Guinea Bissau and Cape Verde must carry out economic activities in these territories within 1 year from the moment of investment.
• The entity that makes the investment alone or jointly with other entities with tax domicile in the Canary Islands must hold a percentage of participation in the capital or equity of the subsidiary of at least 50 percent.
• The investment must be maintained for a period of at least 3 years.

• The deduction will be applied in the tax period in which the economic activity begins and will be conditional on an increase in the average workforce in the Canary Islands of the taxpayer in that tax period with respect to the average workforce existing in the previous tax period and the maintenance of said increase. for a period of 3 years.

2. Deduction for multi-year propaganda and advertising expenses

It is applicable to taxpayers who carry out economic activities in the Canary Islands for the amounts paid for multi-year propaganda and advertising expenses.

a) Percentages of the deduction:

• 15% of the amount paid for these advertising and advertising expenses in the event that the net amount of the turnover in the immediately preceding tax period is equal to or less than 10 million euros and with an average workforce in said period less than 50 people,
• 10% of the amount paid for these advertising and advertising expenses when the net amount of the turnover does not exceed 50 million euros and the average workforce is less than 250 people.

If the immediately preceding tax period had a duration of less than one year, or the activity had been carried out for a shorter period, the net amount of the turnover will be increased to one year.

b) Requirements for the application of the deduction:

These must be propaganda and publicity expenses for multi-year projection to launch products, opening and prospecting for markets abroad and attendance at fairs, exhibitions and similar events, including in this case those held in Spain on an international basis.

3. Joint limit of the deduction for investments in West African territories and for propaganda and advertising expenses: 25 percent or 50 percent

The deduction for investments in West African territories and for propaganda and advertising expenses of article 27 bis of Law 19/1994 if it is subject to the limits established in article 39.1 of the Law 27/2014, of November 27, on Corporate Tax of 25 or 50 percent of the quota.