The 10 per cent corporation tax rate applies to profits arising from the manufacture of goods in the State. The question of whether the processes carried out by a company constitute manufacturing activity, and so entitle the company to the 10 per cent rate, depends on the facts to be determined in each case.
I am advised by the Revenue Commissioners that the sorting, cutting and bailing of waste paper for further use in the recycling industry does not, of itself, constitute a manufacturing activity within the meaning of the legislation.
Any amendment of the legislation to specifically extend the 10 per cent rate to selected services activities would constitute a State aid which would require prior EU Commission approval. It cannot be taken that such approval would be forthcoming at this time.
The Deputy will be aware that in my recent budget I announced a significant improvement in the taxation of all companies which are currently taxable at the standard rate. From 1 April next, a new reduced rate of corporation tax of 30 per cent will apply to the first £50,000 of a company's taxable income. This move will be of benefit to all companies in the services sector, including those referred to by the Deputy.