The European Commission has upheld a decision by the previous Government to give special tax designation to two enterprise areas in Dublin. It follows an EU investigation into the matter.

However, the Commission has said the special tax reliefs must terminate on December 31st, 1999, six months earlier than previously envisaged. The areas investigated by the Commission included enterprise areas at Finglas and Gallanstown/Cherry Orchard in Dublin, the East Wall, where the East Point Business Park is located and an area around Rosslare Harbour.

The EU launched the investigation last summer and examined what it called the "state aids" aspect of the reliefs. The scheme provides generous tax reliefs for developers, occupiers or owners. There are capital allowances of up to 100 per cent of the costs incurred on new buildings or refurbishing existing buildings. If the occupier does not own the building, he or she can claim double rent relief for up to 10 years.

Rates relief is also allowed on a sliding scale for up to 10 years.

For the reliefs to apply, the project must be approved first by Forfas, the umbrella body for IDA Ireland and Forbairt, which looks after Irish companies. To gain approval, qualifying companies must be involved in manufacturing or internationally traded services. The aim is to attract businesses to set up in unemployment blackspots.

Announcing the Commission's decision last night, the Minister for Finance, Mr McCreevy, said it did not cover the seven enterprise areas adjacent to the regional airports. He said the designation of these regional airport areas depended on specific projects being proposed for each area.

"When such projects come forward and are approved by the Irish authorities, the individual enterprise areas concerned will be designated and submitted to the EU Commission for its approval," he said.