Vol. 515 No. 3
177 Mr. Connaughton asked the Minister for Finance the plans, if any, he has to remove the legal requirement of Enterprise Ireland that nurseries must be within the 10% manufacturing category to avail of full financial support in view of the fact that containerised nursery stock production is allowed to avail of BES funding. [6180/00]
It is assumed the Deputy is referring to the coverage of the 10% rate of corporation tax on profits on manufacturing. The position in relation to this issue is that, in July 1998, following detailed negotiations with the European Commission, an agreement was reached to introduce a single rate of corporation tax of 12.5% across the board on all trading income. The standard corporation tax rate, which is currently 24%, is scheduled to fall to 12.5% by 2003 as part of this agreement. In addition, the existing 10% rate of corporation tax on profits from manufacturing, which was introduced with EU approval in 1980, is being phased out. It is, therefore, not possible at this stage to extend the scope of the 10% manufacturing rate.
178 Mr. Connaughton asked the Minister for Finance the proposals, if any, he has to give intensive nursery production full manufacturing status for taxation and investment purposes; and if he will make a statement on the matter. [6181/00]
In July 1998 following detailed negotiations with the European Commission, an agreement was reached to introduce a single rate of corporation tax of 12.5% across the board on all trading income. The standard corporation tax rate, which is currently 24% is scheduled to fall to 12.5% by 2003 as part of this agreement. In addition, the existing 10% rate of corporation tax on profits from manufacturing, which was introduced with EU approval in 1980, is being phased out. It is therefore not possible at this stage to extend the scope of the 10% manufacturing rate as suggested by the Deputy.
I would like to remind the Deputy, however, of the special measure, which I announced in my December budget, which is designed to help small and medium enterprises. Rather than waiting until 2003, I have brought forward the 12.5% rate for SMEs and it now applies from 1 January 2000. Thus any SME company whose trade consists of intensive nursery production and whose total trading income for an accounting period does not exceed £50,000, will now pay corporation tax at the 12.5% rate rather than at the standard rate of 24%. This measure, which will greatly benefit all SMEs over the next few years, is provided for in this year's Finance Bill.
