(1)

Council Decision 2002/546/EC (2) authorises Spain, up to 31 December 2011, to apply exemptions from or reductions in the tax known as ‘Arbitrio sobre las Importaciones y Entregas de Mercancías en las islas Canarias’ (hereinafter ‘the AIEM tax’) to certain products produced locally in the Canary Islands. The Annex to that Decision contains a list of products to which exemptions and reductions from the AIEM tax may be applied. The difference between the taxation of locally produced products and the taxation of other products may not exceed 5, 15 or 25 %, depending on the product.

(2)

It is justified to extend the period of application of Decision 2002/546/EC for two years, since the basic elements justifying the authorisation provided under that Decision have remained unchanged. In this regard, the report from the Commission to the Council of 28 August 2008 on the application of the special arrangements concerning the AIEM tax applicable in the Canary Islands confirmed that the AIEM tax was functioning in a satisfactory manner and without the need for any amendments to Decision 2002/546/EC.

(3)

Moreover, the report received by the Commission from the Spanish authorities confirms that the handicaps that justified the authorisation of total exemptions and partial reductions of the AIEM tax to a list of products produced locally in the Canary Islands are still valid.

(4)

Decision 2002/546/EC should be amended accordingly,