New tax breaks for tourism projects in a number of midland counties will be unveiled today under the terms of the Finance Bill, which will give effect to the tax changes announced in last month's Budget.
The Cabinet yesterday approved the Mid Shannon Corridor Tourism Investment Scheme, which is designed to encourage tourism investment in the region through new tax breaks. The details will be included in the Bill.
Offaly, the home county of the Minister for Finance, Brian Cowen, will benefit under the terms of the Bill, but he can point to a number of studies carried out by Fáilte Ireland which show that the midlands needs measures to improve tourism in the region.
The controversial issue of stamp duty is expected to feature in the Bill, but only in the form of an exemption for sporting bodies which will allow them to be exempted from paying stamp duty when buying properties.
The main focus of the Finance Bill will be the implementation of the Budget tax changes, including the reduction in the top rate of tax to 41 per cent, an increase in the tax credits, the widening of the tax bands, a major revamp of the Business Expansion Scheme (BES) and an increase in the VAT thresholds for small business.
Details of a replacement for the controversial tax exemption on stallions will also be announced in the Bill following a great deal of political controversy over the issue in recent years.
The Government has been engaged in talks with European Union officials for a number of months on the stallion tax break. The controversial measure, which is due to expire next year, will be replaced with a range of tax breaks and incentives for the bloodstock industry.
It is expected that under the new scheme, stallion owners will for the first time have to pay tax on their stud earnings at the corporation tax rate of 12.5 per cent. However, they will be allowed to write off the cost of the stallion against tax over a four-year period to reflect the limited lifespan of the investment.
The Government decided to abolish the original scheme following heavy criticism from the EU, which came to the conclusion that it breached State aid restrictions and was therefore illegal.
The Bill will also contain measures to revamp BES in an effort to persuade investors to put money into businesses in Ireland rather than into foreign property which has been attracting enormous sums of money from Irish investors in recent years.
The criteria for companies that qualify for the scheme will be broadened under the terms of the Bill. Only companies in manufacturing, tourism and services currently qualify, but this will be extended to include companies in new industries such as windfarms, biofuels and broadband.
The changes are designed to complement last month's Budget, which increased the upper limit for investment from €31,000 to €150,000. The ceiling for each company was raised from €1 million to €2 million.
