Written answers

Wednesday, 9 November 2005

8:00 pm

Photo of Billy TimminsBilly Timmins (Wicklow, Fine Gael)
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Question 140: To ask the Minister for Finance his views on whether any other elements of the Irish tax code could be subject to challenge under State aid rules. [33112/05]

Photo of Brian CowenBrian Cowen (Laois-Offaly, Fianna Fail)
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Article 87(1) of the EC treaty prohibits, in general terms, the granting of aid by the State which distorts competition by favouring certain undertakings or the production of certain goods, in so far as the aid is liable to affect trade between member states. There are a number of components to this provision, all of which must be met before a particular type of support can be classified as a State aid. The principal components are that: the aid in question is granted by a member state, which includes regional or local authorities, or other bodies that are acting on behalf of the State, or through State resources in any form whatsoever; the aid confers an advantage on the recipient; the aid is selective in its application, in as much as it is not afforded to other undertakings in the market in general; the aid is capable of distorting competition, usually by strengthening the competitive position of the beneficiary relative to other participants in the market, and is thus liable to have an effect on trade between member states.

The EC treaty also provides for circumstances in which State aids may be permissible in light of considerations of public policy.

The enforcement of the State aid rules across the member states is primarily a matter for the European Commission. It is not the practice of Ministers to comment on areas where, depending perhaps on interpretation of rules, or changing practice or jurisprudence, the Commission might wish to take a view in relation to the Irish tax code. As far as Ireland is concerned, all new proposed tax incentives are examined in light of the State aid rules, and it has been the general practice over recent years to discuss such measures with the European Commission and to notify schemes as appropriate.

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