asked the Minister for Finance if he will grant the status of a tax free zone to Galway city for international service industries which would locate in the city and whose business is export orientated; and if he accepts that such a development would encourage a private investment in the construction development of the proposed international services park at Newcastle, Galway.
Written Answers. - Galway Tax Free Zone.
63.
The Deputy will be aware that the schemes of export sales relief and Shannon relief, both of which confer complete exemption from tax on export earnings, are being terminated in 1990 following objections to these schemes by the EC on the grounds that they represent a distortion of competition contrary to the Treaty of Rome. It is likely that the EC would also object to any new scheme such as the Deputy has suggested which would grant a similar exemption from tax and I could not contemplate introducing such a scheme in these circumstances.
The schemes of export sales relief and Shannon relief are being replaced by a 10 per cent rate of corporation tax. Under section 45 of the Finance Act, 1984, this rate is applicable to data processing and software development service industries grant aided under the IDA's international services programme. Because these particular categories of service industry are recognised as the areas of opportunity for Ireland in the services sector generally, this provision represents a major incentive for developing a strong international services sector in Galway and elsewhere in Ireland. For a variety of policy reasons, I would not favour extending the 10 per cent rate to other service activities.
As regards private sector investment in construction work in Galway, the Deputy will appreciate that I have already given a massive boost to such investment by including part of Galway city in the designated areas for which special tax incentives to encourage urban renewal are provided in chapter V of the Finance Act, 1986.