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Saturday, 13th April 2024
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Light at the end of the tunnel Back  
Although the financial services industry is still understandably shaken by the decision in Budget 2006 to abolish the remittance basis of taxation, light hopefully is beginning to emerge at the end of the tunnel. As reported on page 1, Ireland’s leading tax advisers are currently working on proposals to dilute the impact of the decision on the financial services industry, and the IDA is also making representations with the Department of Finance on the issue.
Light at the end of the tunnel
Although the financial services industry is still understandably shaken by the decision in Budget 2006 to abolish the remittance basis of taxation, light hopefully is beginning to emerge at the end of the tunnel. As reported on page 1, Ireland’s leading tax advisers are currently working on proposals to dilute the impact of the decision on the financial services industry, and the IDA is also making representations with the Department of Finance on the issue.

Although the Government is rightly concerned about the rights of migrant workers in Ireland, the remittance issue has long been one of the key attractions of Ireland as a financial services centre, and its removal is causing difficulties in the industry. As Ireland steps on the next rung of the financial services ladder, and attempts to attract more front-office, ‘value-added’ business, the unwitting by-product of the move is to make the country less attractive for foreign workers, which may lead the sector to fall back a few rungs.

Moreover, industry believes that the issue is compounded by the Government’s decision in 2001 to remove the PRSI ceiling, which, like the abolition of the remittance basis of taxation, is leading to increased costs for employers.

Although operating costs have spiraled in Ireland over the past number of years, costs, particularly employment costs, are still below those expected in leading financial services centres such as London and New York. As such, this remains a key attraction of doing business in Ireland. However, if employment costs continue to increase, on the back of the PRSI and remittance issues, we can expect that there will be some fall-out.

Let’s hope that a compromise can be reached before this happens.

Corporate finance
Elsewhere in this issue we publish this year’s nominations for the ‘Deal of the Year 2006’. Every year this award recognises excellence in deal making, and this year is no exception, with a host of top deals, from which the ‘Deal of the Year’ award will be selected by a panel of Ireland’s top CEOs and CFOs.

Although not the biggest deal in the Irish market over the past year – that honour goes to the Smurfit Group’s acquisition of packaging firm the Kappa Group – the acquisition of the Jurys Doyle Hotel Group, by the Doyle family, was definitely the highest profile deal of the past year. The deal attracted intense media coverage due to the number of potential acquirers which emerged, including many of Ireland’s leading property developers such as Sean Dunne and Derek Quinlan.

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