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Cowen Signs Orders To Phase Out Tax Breaks

by Jason Gorringe, Tax-News.com, London

28 June 2006

Ireland's Minister for Finance, Brian Cowen on Monday signed Commencement Orders which give legal effect to the phasing out of a range of property-based tax schemes, as provided for in his Budget 2006 Statement.

The phasing-out measures were provided for in the 2006 Finance Act, but could not be given legal force until approval from the European Commission had been obtained with regard to the State aid aspects.

The Minister explained that “the phasing out of the reliefs will ensure that these provisions, which have played a significant role in achieving economic and social objectives, can now be withdrawn in a gradual and orderly manner”.

He reiterated his comments in the Budget Statement, to the effect that:

“This winding down of property based reliefs is consistent with the greater capacity of particular economic sectors nowadays to fund such investment from their own resources, and the sizable capital investment which the Government is itself making through major new investments.”

The tax schemes affected by the Commencement Orders are:

  • Urban Renewal scheme
  • Rural Renewal scheme
  • Town Renewal Scheme
  • Relief for hotels and holiday cottages
  • Relief for third-level educational buildings
  • Relief for park-and-ride facilities and associated developments
  • Relief for multi-storey car parks.

In line with Minister Cowen’s Budget 2006 announcement, qualifying expenditure under the above schemes will qualify for full relief up to 31 December 2006, with 75% of qualifying expenditure in 2007 qualifying for relief, while 50% of expenditure in the period January to end-July 2008 will qualify.

After 31 July 2008, no relief will be available. The transitional arrangement for expenditure beyond end-December 2006 are designed to facilitate projects currently in the pipeline, and as such are subject to a number of conditions, including the requirement to have completed 15% of qualifying construction work by the end of December 2006.

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