Vol. 505 No. 4
30 Mr. Durkan asked the Minister for Finance if the International Financial Services Centre continues to be attractive as an international financial services centre; if the impact of the introduction of the euro has been evaluated in this regard; and if he will make a statement on the matter. [13806/99]
In July 1998, agreement was reached with the EU Commission on the phasing out of the preferential IFSC regime. The effect of this agreement is that no new projects may be approved under the IFSC regime after 1999, while the number of new projects which may be approved in 1999 is subject to a limit of 67 – the same number as was approved under the same EU agreement in 1998.
Following the agreement with the EU Commission, my Department introduced new arrangements for allocating the limited number of approvals available in 1998 and 1999 between competing proposals. Judging by the large number of applications received for the limited number of approvals available, it is clear that the centre continues to be an attractive location for international financial services operations.
Looking to the future, however, once the 1999 quota has been allocated, the preferential IFSC regime will not be available to any further new projects in the international financial services area. Existing IFSC companies will, of course, continue to benefit from the 10 per cent rate of corporation tax until their tax certificates expire. The challenge, then, is how to ensure that Ireland continues to be an attractive location for international financial services operations in the future, in the absence of the specific IFSC regime. In this regard, the Government recently adopted a new strategy for the development of the international financial services industry in Ireland, which was published by the Taoiseach on 1 March. The objective of the strategy is to maintain a vibrant and growing international financial services industry in Ireland, building on the success of the IFSC. The strategy is based on the achievement of a set of specific priority objectives, work on which is already well in hand.
In relation to the Deputy's query about the euro, and whether its impact has been evaluated in the context of the IFSC, this issue was considered by the ESRI in 1996, in the context of its study on the economic implications for Ireland of EMU. The ESRI concluded that EMU was, on balance, likely to have a neutral effect on the IFSC. One of the 19 strategy priorities set out in the recently published strategy document is the preparation of a report on the actual impact of the euro for the international financial services industry in Ireland, outlining strategic opportunities and threats arising and appropriate responses. I understand that work on this report is ongoing.
