Ireland plans new tax havens

Ireland has already upset the EU over taxes: first, it created the International Financial Services Centre in the regenerated Dublin Docks where companies had highly preferential tax treatment.

Then it proposed reducing national corporation tax to 12% - and the EU promptly said that was not acceptable as it would distort the EU's tax structure. Ireand paid some attention - but it does have amongst the lowest corporate tax base in the EU.

That is already bringing business into Ireland: companies, including large companies, are taking their head office to Ireland, remitting profits to it but incurring expenses in high-tax jurisdictions such as the UK, in a move foreshadowed by Nigel Morris-Cotterill, Head of The Anti Money Laundering Network, parent of World Money Laundering Report, in his book "How not to be a money launderer" published in 1996.

Ireland has long provided benefits to artists and authors: income generated from those activities has long been tax free in Ireland.

As Ireland has grown in economic stature, originally largely funded by money from the EU, and therefore taxpayers in other countries, it has seen substantial migration from rural to urban areas - and the more remote areas, such as the Islands, have seen massive drains of population.

So the Irish government is planning a regeneration package for the Irish Islands.

One proposal is that anyone who live on one of the islands for at least six months of the year would be entitled to earn up to 100,000 euro per year tax free - regardless of where that income is generated - for a period of ten years. 100% capital allowances chargeable against any non-except income. Also, in some cases, a VAT refund scheme would promote community activities.

The government says that the infrastruction and services for islands has been improved a great deal in recent years but still there is a nett loss of population. Only 3,000 people live on them, it is said.

But the benefits would not extent to companies owned by absentee owners: the plan is quite specific and it aimed at increasing the population of the islands in a way that removes the need for grants - in short, it takes the government out of the equation for many residents - earn money and spend it locally without fussing about taxes.

Tax haven or the future of taxation? An interesting debate will ensue.

Right now, Ireland is one of eleven countries investigating the use of offshore facilities in Liechtenstein. Sweden, Australia, New Zealand, Germany the UK, France are leading the chase.