Tax incentives, amounting to some £30 million, will be available to encourage investment in the whitefish fleet. The tax package, which was incorporated in the recent Finance Act, provides for accelerated capital allowances in the first year of 50 per cent, with remaining capital allowances spread over seven years at a rate of 7.5 per cent in years two to seven, and 5 per cent in year eight.

Owner-operators and those involved in leasing vessels can offset allowances in a fishing vessel against all income, whether derived from fishing or other activities.

An analysis of the tax breaks prepared with consultants from Arthur Andersen highlights five major advantages for investors:

the up-front loading of the capital allowance is set at 50 per cent in the first year, compared to a normal rate of 15 per cent;

capital allowances can be set on an unrestricted basis against all profits and income;

the £25,000 restriction which applies to all commercial and industrial buildings leases does not apply to certified whitefish vessels;

lower cost financing from banks will be available to applicants on foot of the incentives (around 1.75 per cent per annum);

new capital from investors not directly involved will be drawn to the sector.

The Finance Act sets no ceiling on capital expenditure, but there are time limits. For individuals, the expenditure has to be incurred within two years of the date the finance order came into effect. For corporate entities, a three-year time limit applies.

Arthur Andersen expects that financial institutions will take up the majority of the funding under the scheme. Already, AIB has earmarked £25 million for long-term, low-interest finance, and both it and its main competitor, Bank of Ireland, are expected to do much business at Fish Ireland, the national fisheries exhibition in Killybegs, Co Donegal, in 10 days' time.