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Cowen Welcomes Passage Of 2007 Finance Bill

by Jason Gorringe,, London

12 March 2007

Ireland's Minister for Finance, Brian Cowen, has welcomed the passage of Finance Bill 2007 through 'Report Stage' in the Dail Eireann, the lower house of the Irish parliament. The Bill will be presented to the Seanad, or Senate, shortly.

The Bill gives effect to the measures announced in the Budget last December, notably changes to the Business Expansion and Seed Capital Schemes, which have been extended for a further seven years until December 31, 2013 with the company limit increased from EUR1 million to EUR2 million, subject to a maximum of EUR1.5 million to be raised in a twelve-month period. The investor limit is also being increased from EUR31,750 to EUR150,000 in the case of the BES and to EUR100,000 in the case of the SCS.

However, the changes to the schemes, along with some additional alterations in relation to the operation of the schemes, are subject to the approval of the European Commission.

Other business friendly measures announced by Cowen in the budget include revised preliminary tax payment arrangements for Corporation Tax, increased VAT registration thresholds, the enhancement of the Tax Credit scheme for R&D expenditure and the introduction of VAT relief for conference related accommodation expenses from 1 July 2007 to allow Irish hotels to compete more favourably on the global stage for conference business.

The Bill also provides for the introduction of a scheme aimed at encouraging the development of tourism infrastructure in the mid-Shannon area. Such a scheme has been under consideration for some time. In the lead up to Budget 2006 a submission proposing a scheme like this was received from Shannon Development. The tax relief will consist of accelerated capital allowances over 7 years for qualifying construction and refurbishment expenditure incurred in the qualifying three-year period. This is aimed at assisting the development of a critical mass of the type of tourism projects very much needed in the area, such as marinas, leisure centres, equestrian centres, adventure sport facilities, sailing schools, interpretative centres, health farms and spas heritage houses and gardens.

The Finance Bill also contains a number of measures which will make it easier for taxpayers to claim tax back from the Revenue Commissioners. These include the removal of thresholds for medical expenses relief, and other measures designed to enable the Revenue to make automatic repayments in respect of reliefs such as trade union subscriptions and to allow age related tax credits to be credited automatically to the taxpayer.

Cowen said that the Finance Bill marked another stage in the Government’s progress towards "a flexible and economically efficient tax system which supports job creation, particularly in the small and medium sized enterprise sector."

"This Finance Bill has a range of business friendly measures which will support our economy’s continued growth, promote investment and rewards work," he stated, adding that Ireland "is wealthier as a result of the hard work of the Irish people responding to the policies of the Irish government. These policies have transformed the tax system from being a barrier to economic and social progress to being a driver of prosperity. Our tax changes have made Ireland stronger. They have also made Ireland fairer.

Cowen continued: "The record proves that. In 1997, the top 10% of income earners paid 50% of the total income tax take. This year, that share will be almost 60%. At the same time, those on the minimum wage have been taken completely out of the tax net thanks to the reforms we have introduced in government. 80% of income earners pay less than 20% of their income in tax as a result of this Government’s tax reforms. The very richest are paying more taxation and those on modest incomes are not paying income tax at all.

“All workers have benefited from our tax reductions. Before we took office, a single person on the average industrial wage paid over 27.5% of their earnings in taxes, levies and social insurance. This year, that worker will pay just 14.5% of their earnings.

“For married couples where both husband and wife are in paid employment and on the average industrial wage, we have reduced the average tax rate from over 15% in 1997 to just 1.8% today.”

A comprehensive report in our Intelligence Report series giving background tax and residence information on many of the key offshore jurisdictions is available in the Lowtax Library at and a description of the report can be seen at

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