Several business tax incentives for three development schemes have been introduced following EU Commission clearance. They are accelerated capital allowances for the construction, or refurbishment, of commercial or industrial buildings that are part of the rural renewal scheme, the new urban renewal scheme and the Cork Airport enterprise area.

The incentives for the rural renewal scheme, and the new urban renewal scheme, were legislated for in the 1998 Finance Act, but were delayed until clearance was given by the EU Commission under the state-aid rules. Because of the delay, the Minister for Finance, Mr McCreevy, has extended the termination date of the schemes to December 31st, 2002.

The residential incentives in the rural renewal scheme began on June 1st, 1998, in the case of rented accommodation, and on April 6th, 1999, in the case of owner-occupied accommodation. The residential elements in the new urban renewal scheme came into force on March 1st, 1999.

The capital allowances for the two renewal schemes will apply for qualifying expenditure incurred from July 1st, 1999 to December 31st, 2002. The capital allowances in year one will be 50 per cent for both owner-occupiers and lessors of the buildings constructed or refurbished. The remaining 50 per cent can be written off, at 4 per cent per annum, over the following 13 years. The capital allowances for qualifying buildings in the Cork Airport enterprise area are on the same basis. The legislative provisions were contained in the 1997 Finance Act, with amendments in the two succeeding Acts. The qualifying period for this scheme runs from January 1st, 1998 to December 31st, 1999.

The EU Commission announced a year ago that it opposed the granting of double rent and rates reliefs, as originally intended for the schemes. As a consequence, the 1998 Urban Renewal Act provided for a doubling of the capital allowances for commercial building from 50 per cent to 100 per cent for both the rural renewal and the new urban renewal schemes. The Department of Finance has stressed that the doubling of the capital allowances "will serve as a major replacement incentive and will be particularly important for owner-occupied business".