Canary Islands drop fuel IGIC to cushion war impact

The Canary Islands government approved a decree‑law in the Council of Government that introduces a series of fiscal measures, reinforced refunds for transporters and farmers, new basic products taxed at 0 % IGIC, and aid for the primary and industrial sectors. The package is estimated to cost an initial €29.8 million and must be ratified by the regional Parliament before taking effect.

Fiscal Package Approved by the Council of Government

The decree‑law contains tax, economic and direct‑support measures aimed at cushioning the islands from the international crisis triggered by the war in the Middle East. It will enter into force after publication in the Official Gazette of the Canary Islands and requires parliamentary approval.

• Zero‑rate IGIC on energy products – The temporary application of a 0 % IGIC rate to petroleum‑derived fuels, gas, biomass and firewood. The regional executive says the reduction is intended to curb price hikes and lower costs for households and businesses.

  • Estimated annual cost: €14.1 million
  • Cost for the first 100 days: €3.9 million

• Increased refund of the Special Fuel Tax – Refunds for farmers and transporters rise to 99 % of the tax paid.

  • Estimated annual impact: €19.4 million
  • Cost for the first 100 days: €5.3 million

• Extension of the 0 % IGIC basket – Salt, butter and coffee are added to the list of basic products taxed at 0 % IGIC.

  • Estimated annual cost: €3.2 million
  • Cost for the first 100 days: €0.9 million

Tax Threshold for Self‑Employed Raised to €50,000

Another novelty is the increase of the annual turnover limit for the small‑business IGIC regime from the previous threshold to €50,000. This voluntary measure aims to reduce tax and administrative burdens for freelancers.

• Projected cost for the current year: €12.5 million

Extraordinary Funding for Primary and Industrial Sectors

The decree also creates an extraordinary allocation of €7.2 million to support the primary sector and industry, helping them absorb higher energy and production costs.

• Total initial cost of the package: €29.8 million
• The government warns the total could rise to €60 million annually if the crisis persists.

The executive justifies the decree as a necessary adaptation of the national Real Decree‑Law 7/2026 of 20 March, which does not automatically apply to the Canary Islands because of their special tax regime. The regional government also calls for a “Canary clause” in future national decisions.

“We need a specific Canary clause in future state measures to ensure the islands are not left behind,” the government said.

Cabello Calls on the State for Special Tax Measures for the Canary Islands

In the press conference following the Council meeting, Government spokesperson Alfonso Cabello urged the Spanish executive to flexibilize fiscal rules for the islands, arguing that “the Canary Islands have been responsible for about 11 % of the national debt, a level well below the state average.” He stressed that additional resources are needed to address the repercussions of the Iran war and to tackle structural challenges for the benefit of Canary citizens.

Hospital Laundry and Traceability Contract

The Council also approved a €10,512,127.16 expenditure to contract, for 48 months, laundry services and traceability management for the Insular‑Maternal‑Child Hospital Complex of the Canary Islands. The agreement, renewable for an additional year, will cover washing and sanitising hospital textiles and implement a system to better monitor staff uniformity throughout the laundering process.

Universal Accessibility Plan for Adeje

In the same session, the government allocated €60,000 to draft the Universal Accessibility Plan for Adeje (Tenerife), at the request of the municipal council. The plan aims to improve the quality of the tourist destination and guarantee that residents and visitors, regardless of physical, sensory or cognitive abilities, can use public spaces with full inclusion. This initiative forms part of the regional strategy to modernise tourism infrastructure and create more accessible, efficient and sustainable environments.