The new measure is being introduced from 1 January 2007, and will limit the use of tax reliefs by individuals whose taxable income would have exceeded EUR250,000 in the absence of such reliefs. This will involve a calculation that broadly operates by restricting the maximum amount of "specified reliefs" to the greater of EUR250,000 or 50% of "recomputed gross income". Any relief denied in a particular year can be carried forward. This cap will also apply to artists' income, although the artist income tax exemption up to a limit of EUR 250,000 will remain in place.

In other loophole closures, the majority of property based tax incentive schemes are also to be discontinued, subject to transitional measures, and the remittance basis of taxation which provides favourable taxation treatment in respect of individuals resident in Ireland, but who are either not domiciled or not ordinarily resident in the country, will be abolished on income earned in Ireland from January 1, 2006.

The subject of tax reliefs has been the source of much controversy in recent weeks, since it emerged that several millionaires had managed to whittle down their tax liability to virtually nothing. According to figures released by the Finance Ministry in September covering the 'short' tax years of 2001 and 2002, 30 individuals with incomes of more than EUR1 million per year who were resident in Ireland for tax purposes paid only small amounts of tax, and in some cases no tax at all. An additional 67 individuals whose income was between EUR500,000 and EUR1 million paid tax at the 20% marginal rate, while a further 10 people paid no tax.

Cowen also announced the termination of the tax exemption for income from the sale of certain stallion and greyhound services, which has been abolished with effect from 31 July 2008. Following discussions with the European Commission, a replacement regime might be introduced.

In other measures affecting business: companies' capital duty has been abolished for transactions undertaken on or after 7 December 2005; the use of interest relief on borrowings arising on certain transactions between related companies will be restricted and will become effective on transactions undertaken on or after December 7, 2005; and certain restrictions on the offset by companies of losses arising from capital allowances on the leasing of certain plant machinery will be relaxed.