The Irish League of Credit Unions has called on the Government to establish urgently the promised working group to examine the taxation of credit union accounts.

A spokeswoman for the League said it is "deeply disappointed" that the Government has been "so slow" to establish the group announced by the Minister for Finance, Mr McCreevy, after he withdrew controversial tax proposals last February. Meanwhile, the Government has pledged to defend a complaint to the Competition Directorate of the EU Commission about the taxation status of Irish credit unions.

The Minister for Science, Technology and Commerce, Mr Noel Treacy, has said that the Government has been notified of the formal complaint. The complaint claims the favourable taxation treatment of credit unions in Ireland amounts to a "State aid", which is in contravention of the EU treaties. Unlike other financial institutions, credit unions are exempt from paying corporation tax - a fact which has rankled with its competitors for some time. While the EU Competition Directorate has not disclosed the identity of the complainant, industry sources suspect the complaint was made by one of the banks, or possibly a building society.

The League spokeswoman said it has taken legal and tax advice on the issue and is "quite happy" that its tax exempt status will stand up to EU scrutiny. "The nature of credit unions' operations are not fully understood in Europe. There are no similar parallels in Europe."

An equally pressing issue from the League's point of view, though, is the establishment of a working group to examine other taxation issues. The Department of Finance confirmed yesterday that no-one has been appointed to the working group yet, but discussions are continuing between the League and the Department.

The working group is to include nominees from the credit union movement, the Registrar of Friendly Societies, two or three officials from the Department of Finance, one from the Revenue Commissioners and one from the Department of Enterprise, Trade and Employment and an independent chairperson.