Brussels, 10/04/2002 (Agence Europe) - The European Commission has decided to launch the formal state aid examination procedure on the tax scheme applying to US Foreign Sales Corporations (FSC) located in Belgium. It takes the form of a "fiscal ruling", an agreement by the authorities concerning the tax treatment of certain operations. FSC established in Belgium may apply to the Belgian tax authorities to have their taxable income calculated as a fixed percentage of their expenditure using the "cost plus" method. The use of a flat-rate method to determine taxable profits is not in itself challenged by the Commission. The doubts have more to do with the way in which the flat-rate method is applied. The benefit would appear to derive from the use of a base for calculating their taxable income from which large items of expenditure have been removed (advertising, sales promotion, transport, credit risk insurance) or the use of unduly low margin rates to calculate this flat-rate tax base. The tax due is then far less than it would be under the standard tax method. The Commission also believes that these tax benefits could strengthen the competitive position of the FSC on the Community market on which they sell goods and so affect trade. This kind of potential support to FSC could constitute aid, as it is not linked to investment. The Belgian authorities and third parties are invited by the Commission to submit their observations on the matter.