Its objectives are to attract foreign investment to the region and internationalise Portuguese companies by allowing them to benefit one of the lowest corporate taxation rates in Europe and in the OECD member countries.
[6] The International Shipping Registry of Madeira (locally known as MAR[7] or RIN-MAR[8]), created by the Portuguese government to develop its blue economy, is associated strongly with the MIBC.
[12][13][14][15] Approval of such tax benefits by the European Commission is covered by Article 349 of the Treaty on the Functioning of the European Union,[16] which states that specific measures are to be implemented in the EU's outermost regions to offset structural, social and economic situations compounded by "remoteness, insularity, small size, difficult topography and climate, economic dependence on a few products, the permanence and combination of which severely restrain their development".
The minimum investment, in tangible or intangible assets, of €75,000 must occur, within two years after incorporation, if the licensed company is to hire less than six employees.
[3][12][20] Although labor costs in Madeira are among the lowest in the Western Europe, the minimum regional wage being €850 (in 2024), the requirement concerning the need to create job posts has also been harshly criticized by stakeholders, namely the concessionary Sociededade de Desenvolvimento da Madeira who reported a mass exodus of companies to competitor jurisdictions, such Luxembourg and Malta, after the job creation was implemented and having it depend on the companies' taxable profit.
[28][29] Under the MIBC rules shipping companies with vessels registered in MAR and their respective non-Portuguese crew are exempt from contributing to the Portuguese social security, under the condition that some form of private insurance is guaranteed.
In addition to the social security benefits, crew of commercial vessels and yachts registered in MAR are also exempt from personal income tax.
However present regulations stipulate that 30% of the safe manning of all other types of vessels must be European, either EU and non-EU Member-States, or citizens of Portuguese-speaking countries.
On the other hand, should the acquisition of the yacht be made through a Portuguese company (either duly licensed in the MIBC or not) and the vessel be accounted as part of its fixed movable assets, the Regime of Intra-Community Supply of Goods should apply.
[47][41] Economist Miguel Pinto-Correia's thesis[48] argues that the full application of the MIBC regime to the Autonomous Region of Madeira could lead to a significant improvement in its fiscal health, potentially resulting in a budget surplus.
[50][51][52] The MIBC has attracted considerable criticism[53][54][55][56] for its low taxation relative to the Portuguese mainland and due to the scandals[57] surrounding companies licensed with it.
On December 4, 2020, the European Commission concluded that the III Regime of the MIBC scheme was not implemented in line with approved conditions and that breaching companies would need to give back the tax benefits granted.
[69][70] The audit results from the European Commission was heavily criticized by Madeiran stakeholders, such as the Regional Government, the Madeiran Chamber of Commerce and Sociedade de Desenvolvimento da Madeira, who called the decision to be politically motivated and favouring the low taxation lobbies of certain Member-States who do not face the permanent economic constraints that an outermost region faces.