Vol. 483 No. 1
35 Mr. Durkan asked the Minister for Finance the proposals, if any, he has to ensure the continued benefit for this country of the tax status pertaining to the manufacturing industry; and if he will make a statement on the matter. [19669/97]
It is accepted on all sides of the House that if Ireland is to remain competitive in a changing environment, we must adapt our corporate tax system to reflect new and emerging market conditions. Much of our employment growth is being generated by the services sector and there is a general consensus that the retention of a preferential corporation tax rate for manufacturing is not a tenable proposition in the long run.
In May of this year the previous Government announced plans to introduce a single 12.5 per cent rate of corporation tax for trading profits and a higher 25 per cent rate for non-trading profits on the basis that this would be phased in over the coming years to eventually replace the current regime. These plans have been notified to the EU Commission as is customary with decisions relating to the 10 per cent rate for manufacturing. Discussions have been taking place with the Commission on various aspects of the change, although the particular rate of corporation tax is not an issue in these ongoing discussions.
While the present Government is committed to the introduction of a single low corporate tax rate for trading profits, it has not yet decided what the rate ultimately will be. This issue will be considered by the Government in the near future.
