Part of a tax avoidance measure recently announced by the Minister for Finance, Mr McCreevy, is to be formally withdrawn at the report stage of the Finance Bill next week. The change follows representations from tax professionals and businesses who argued that it would rule out legitimate commercial restructuring.

The change, introduced at committee stage, relates to anti-avoidance measures announced recently by Mr McCreevy in relation to stamp duty.

He said that the 2004 Finance Bill would include amendments to section 80 of the 1999 Stamp Duties Consolidated Act, which provides for an exemption of stamp duty on the transfer of property on corporate restructurings or amalgamations.

The Revenue Commissioners feared that this section was being used to avoid stamp duty on commercial property transactions, in a way not intended by the Act. In effect, contrived arrangements were being put in place to avoid stamp duty on property transfers.

To combat this, the Finance Bill proposes that the stamp duty relief available under section 80 will only be available where the company transferring the property has already obtained a conveyance of the property and, thereby, becomes liable to stamp duty. This part of the anti-avoidance measure - which related to specific cases reported by the Revenue Commissioners - will remain in place.

However, Mr McCreevy told the Dáil that he intends to drop the proposed second part. This had imposed restrictions on the situation where one company acquires another through the issue of shares.

It stated that the section 80 relief would be clawed back in this case if the parties receiving the shares disposed of them within two years.

The second part of the amendment "did not arise from specific cases but was a precautionary tightening up of the relief," according to Mr McCreevy.

However, tax advisers are believed to have told the Revenue and the Department that this would also hit perfectly legitimate corporate restructurings, which are often effected through share swaps and where the requirement that shares be held on to for two years could often not be reasonably enforced.

For example, it would be quite normal for companies to swap their shares for shares in another company when undertaking an acquisition.

If the proposed amendment had taken place it could have led to an unintended imposition of the stamp duty on these type of purchasers.