asked the Minister for Finance the number of companies who availed themselves of the scheme which reduced tax on manufacturing profits to 25 per cent for firms which increased employment by 3 per cent or more; the revenue thus foregone; and the conditions governing the concession.
Written Answers. - Employment Increase Tax Concession.
344.
It is estimated that the number of companies availing of the reduced rate of 25 per cent corporation tax does not exceed 200, and that the revenue foregone in a full year is of the order of £4 million.
With effect for the four financial years commencing on 1 January 1977, a reduced rate of corporation tax of 25 per cent is chargeable on the income of a company which carries on a trade consisting wholly or almost wholly of the manufacture of goods in the State and which derives all or almost all of its income from that trade provided that the company achieves certain specified increases in employment (and, for the financial year 1977 only, in sales).
For the financial year 1977 a company may claim relief if, when compared with its results for 1976, it achieves (a) a 3 per cent increase in employment and (b) a 5 per cent increase in the volume of sales (or, alternatively, if the amount receivable from sales in 1977 is not less than 119 per cent of the amount receivable from sales in 1976).
For the financial years 1978, 1979 and 1980 there is no sales test. Relief is accorded, broadly, where manufacturing companies achieve in those years an annual increase in employment of 3 per cent. In general, a company will qualify for the reduced rate in 1978, 1979 or 1980 if—
(a) as regards 1978, it exceeds its 1977 employment level by 3 per cent or its 1976 employment level by 6 per cent, or
(b) as regards 1979, it exceeds its 1978 employment level by 3 per cent, its 1977 employment level by 6 per cent, or its 1976 employment level by 9 per cent, or
(c) as regards 1980, it exceeds its 1979 employment level by 3 per cent, its 1978 employment level by 6 per cent, its 1977 employment level by 9 per cent, or its 1976 employment level by 12 per cent.
The relief is also available for certain companies which commenced to trade in 1977, 1978 or 1979.
Following the introduction of the 10 per cent scheme of relief for manufacturing profits with effect from 1 January 1981, the 25 per cent relief expired on 31 December 1980.