Madeira wants to grow the economy through startups, innovative payment systems

An archipelago in the middle of the Atlantic Ocean needs startups and technological capabilities to boost its economic growth. Web3 entrepreneurs are flocking to this region.

Portugal's Madeira Islands are lauded for their natural beauty, but the demands of an aging population and a highly diverse economy have prompted the local government to explore new technologies such as blockchain.

According to the Secretary of Finance of the Regional Government of Madeira, Rogerio Guvea, about 30% of the technology companies do business in the Free Trade Zone of Madeira, and the special economic sector offers tax benefits to companies, including the lowest corporate tax rates. It is exempt from tax for companies within the EU and capital adequacy.

“The primary tax incentive for companies looking to establish a presence in the region is found in the Madeira Free Zone or International Trade Center. This area offers a competitive tax system with a corporate tax rate of up to 5%. It is important to note that this is not an offshore haven. This regime is governed by structured regulations. It operates in and is subject to strict audits by both national tax authorities and the European Commission.

One of the companies behind the Madeira Web3 ecosystem is Jacoba Labs, a software development company that uses blockchain technology for ticketing, solving problems such as overpriced secondary markets and ticket fraud.

In addition, Madeira's tax incentives are tied to other initiatives to shift the region's focus from tourism to a technology-based economy, including a focus on information technology education in local schools. This is in stark contrast to the 50% illiterate population of the island in the 1970s.

Madeira is developing a payment network that connects local merchants and facilitates currency exchange for tourists. While still in the feasibility study stage, the network could use blockchain technology to enable tourists to load and use a single debit card for all products and services across the islands. The same card system is used to facilitate government operations, including the payment of social benefits such as scholarships to residents.

“We want to see if this model is feasible. We are using Madeira as a laboratory for a model similar to how the region has been used in the past to test other technologies,” Goveia explained. Archipelago has also served to validate other technologies such as 4G and cable television in Portugal.

Cointelegraph was on the ground at the second edition of Madeira Blockchain 2023, which took place between November 30 and December 1. The conference brought together Web3 companies from around the world who are shaping tomorrow's business models and technologies.

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