Dáil Éireann debate -
Wednesday, 20 Feb 1991

Vol. 405 No. 4

Written Answers. - Tax Incentives to Shipping Industry.

Ivan Yates

Question:

60 Mr. Yates asked the Minister for Finance if he will outline the current level of financial incentives in the tax code otherwise available to the shipping industry; the way in which this compares with 1989; and the level of incentives at that time.

Minister for Finance (Mr. A. Reynolds)

The financial incentives available to the shipping industry for the periods referred to are as follows:

1. Certain shipping activities qualify for the 10 per cent rate of corporation tax, rather than the standard rate, currently 43 per cent. This relief was available in 1989 and continues to apply;

2. Capital allowances are available for the purchase of ships. The rates in 1989 and current rates are:

Initial allowance

1-1-89 — 31-3-89, 75 per cent;

1-4-89 to date, 50 per cent.

Free depreciation

1-1-89 — 31-3-89, 75 per cent;

1-4-89 to date, 50 per cent.

Annual wear and tear allowance —

12½% (1989 and 1991).

Normally the initial allowance is available only in respect of expenditure incurred on the purchase of new items. However, the purchase of second-hand ships also qualifies, a feature which is unique in the tax code.

3. Income tax relief under the business expansion scheme was available in 1989 on investments made by individuals in eligible shares in companies carrying on qualifying shipping activities. This relief is no longer available.

Ivan Yates

Question:

61 Mr. Yates asked the Minister for Finance the cost to the Exchequer in the operation of the business expansion scheme for the shipping industry; and the number of projects involved to date.

Minister for Finance (Mr. A. Reynolds)

The estimated tax foregone on shipping investments made through the business expansion scheme and formally notified to the Revenue Commissioners to date is £3.9 million. Four shipping companies have availed of the business expansion scheme to raise funds on seven separate occasions.