Dáil Éireann debate -
Wednesday, 26 May 1999

Vol. 505 No. 4

Written Answers. - Tax Incentives.

Jim Higgins

Question:

66 Mr. Higgins (Mayo) asked the Minister for Finance the tax concessions available in respect of the area designated in the environs of Knock Airport, County Mayo, as contained in the provisions of the Finance Act, 1997; the number of projects approved for the designated area under the terms of the Act; and if he will make a statement on the matter. [11429/99]

Minister for Finance (Mr. McCreevy)

Provision for the designation by order of areas immediately adjacent to seven regional airports, including Knock Airport, as enterprise areas is contained in section 340 of the Taxes Consolidation Act, 1997.

The designation order may be made by the Minister for Finance after consultation with the Minister for Public Enterprise and following receipt of a proposal from or on behalf of a company intending to carry on qualifying trading operations.

Qualifying trading operations are (a) manufacturing activities which qualify under the Finance Acts for 10 per cent corporation tax and (b) internationally traded service activities excluding financial services. I have made provisions under section 44 of the Finance Act, 1999 for the inclusion of freight forwarding and logistical services as qualifying trading operations subject to EU Commission approval. Companies must also have been approved for financial assistance by the State industrial development agencies – Forfás, Enterprise Ireland, Údarás na Gaeltachta and IDA Ireland.

The legislation covering the scheme is contained in chapter three of the Taxes Consolidation Act, 1997. The tax reliefs for the airport enterprise areas are capital allowances of up to 100 per cent on expenditure incurred on the construction or refurbishment of premises used by qualifying companies. Initially, a double rent allowance for ten years was available for the lessees of such premises. However, the EU Commission has informed my Department of their intention of not approving double rent allowance in the event of our notification of an enterprise area adjacent to a regional airport. Section 44 of the 1999 Finance Act accordingly amended the legislation to provide that no double rent allowance will be available for airport enterprise areas. However, the year one capital allowance for lessors is increased from 25 per cent to 50 per cent for qualifying expenditure incurred since 1 January 1998 in the airport enterprise areas.

The designation of the regional airport areas depends on specific projects being proposed for each area. When such projects come forward and are approved by the relevant authorities, the individual enterprise area schemes will be submitted to the EU Commission for its approval. It should be noted that under the commission's decision, the provisions for all of the enterprise areas covered by the 1997 Finance Act will have to terminate on 31 December 1999 instead of 30 June 2000. To date, no qualifying proposal from or on behalf of a company intending to carry on qualifying trading operations adjacent to Knock Airport has been submitted to me.