Vol. 466 No. 6
38 Mr. Hughes asked the Minister for Finance if he will permit Údarás na Gaeltachta to be recognised as an agency with authority to propose a service sector company for the 10 per cent corporation tax scheme to enable the development of an internationally traded services sector to be developed in the Gaeltacht area. [12106/96]
As a member of the European Union, the Government is constrained as regards the provision of preferential rates of tax for specific regions and tax incentives generally are required to respect EU rules governing free competition and the internal market. An extension of the 10 per cent rate of corporation tax to Údáras approved service sector companies operating in the Gaeltacht area would constitute a State aid under EU law, capable of distorting competition, and would, therefore, require the approval of the EU Commission. It is extremely unlikely that such approval would be given.
