| Capital duty reduced |
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| Following extensive representations from the financial services industry to abolish capital duty charged when a company raises capital through the issue of shares, in his first Budget, Minister for Finance Brian Cowen acceded to some of the industry’s demands, and reduced the duty from 1 per cent to 0.5 per cent, with effect from December 2nd, 2004. It is hoped that the duty will be abolished next year. |
IIn light of the introduction last year of a holding company/headquarter company regime, it was argued by industry that without a capital friendly environment, companies would not take up the benefits offered by the new regime and move their holding companies to Ireland.
The Irish Bankers’ Federation (IBF), and its affiliate the Federation of International Banks in Ireland (FIBI), have welcomed the move, saying that, ‘it is a significant and welcome measure in helping to further make Ireland an attractive location for international financial services – particularly as a number of other EU States had abolished or reduced this duty’.
According to Felix O’Regan, head of communications with the IBF, ‘This signals progressive moves towards developing an attractive holding company regime. FIBI looks forward to continued progress in this regard and the complete abolition of capital duty on shares.’
Finanacial Services Ireland (FSI) also called for the abolition of the duty. Director Aileen O’Donoghue congratulated the Minister for taking the necessary first step, but said that, ‘the ultimate abolition of the capital duty charge should, however, remain the objective if we are to mirror the positive outcomes of Ireland’s corporation tax regime in terms of employment, the development of Irish industry and net exchequer receipts.’
Other changes sought by the industry in theBudget include an enhancement to the Finance Act 2004 legislation regarding the taxation of short life leased assets, and a deduction for financing costs of tier one capital. None of these other measures were included in this year’s Budget, but it is likely that they will be looked at in the Finance Bill stage. |
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| Article appeared in the December 2004 issue.
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