1 August 2002

McCreevy announces approval for time extension to the Urban and Rural Renewal schemes

Government receives EU approval for continuation of business tax incentives available under the Urban Renewal and Rural Renewal tax schemes.

The Minister for Finance, Mr. Charlie McCreevy TD, announced today that approval has been received from the European Commission for the time extensions to the qualifying periods for the business elements of both the Urban and Rural Renewal schemes. The schemes, when originally introduced, were due to end on 31 December 2002 but were extended by the Minister in Budget 2002 for a further two years to 31 December 2004.

The tax incentives for the Rural and Urban Renewal schemes were legislated for in the 1998 Finance Act and provide for both residential and business incentives. Approval from the European Commission was required under the State aid articles of the EC Treaty for the commercial and industrial reliefs available under both schemes in respect of both the original time period and the time extension. No such approval was required in respect of the residential reliefs.

The Rural Renewal Scheme provides for tax incentives for commercial and residential developments in all of counties Leitrim and Longford as well as certain areas of counties Sligo, Roscommon and Cavan.

The Urban Renewal Scheme provides for tax incentives for commercial and residential developments in 49 areas located in 5 cities and 38 towns that have integrated plans approved by the Minister for the Environment and Local Government.

The incentives take the form of accelerated capital allowances for the construction or refurbishment of commercial or industrial buildings and provide for allowances of 50% in the first year in respect of qualifying expenditure for both owner-occupiers and lessors of buildings constructed or refurbished under the two schemes with the remaining 50% being written off at 4% per annum over the next 13 years.

Arrangements are now being made to have the necessary Commencement Orders signed by the Minister to make effective the approval granted by the EU Commission in respect of both schemes.

Ends