The Government is going to crack down on money-laundering and tax evasion through Irish-registered non-resident companies and non-resident accounts.
The Tanaiste, Ms Harney, will introduce a Companies Amendment Bill designed to regulate the activities of such companies, which are estimated to have moved more than £20 billion through the financial system in recent years.
At the same time, the Minister for Finance, Mr McCreevy, is expected to introduce changes in the Finance Bill which will crack down on Irish non-resident accounts and, at the same time, make Irish-registered non-resident companies liable to taxation.
Details of this twin-pronged response to a succession of financial scandals will be related to Government ministers today at a special pre-Christmas Cabinet meeting.
Two months ago, the chairman of the Revenue Commissioners, Mr Dermot Quigley, estimated there were 200,000 non-resident accounts in existence, amounting to £17 billion. This compared to £43 billion in resident accounts.
Mr Quigley said some of the accounts were held by foreign companies located here, while others were legitimately operated by Irish business. He declined to speculate on the number of bogus accounts and the level of tax evasion involved.
The tax amnesty of 1993 led to £1.5 billion in unpaid taxes being declared by Irish residents.
Recent revelations of wide-scale tax evasion through bogus offshore accounts by customers of Allied Irish Banks has forced the Government to take action. And Mr McCreevy promised to close existing loopholes and introduce new requirements on financial institutions in his Finance Bill.
After nearly a year's deliberations, the action proposed in relation to Irish-registered non-resident accounts is aimed at protecting Dublin's reputation as a well-regulated financial services centre.
At the moment, such firms are not regulated by any Irish body and the beneficial owners of money moved through those companies cannot be established. Up to 40,000 shell companies are understood to exist. Many are used by companies to hide money from their own authorities. The Mafia and Eastern European crime bosses are said to use the laxity of the system to launder money.
Ireland is the only EU state that allows such companies to set up business without incurring any tax liability.
The Cabinet is also expected to support amendments to the Postal and Telecommunications Act that will allow for the flotation of Telecom Eireann next year.
The Minister for Public Enterprise, Mrs O'Rourke, will introduce the legislation to allow for an initial offering of shares in the new public company.