LONDON (HedgeWorld.com)–Ireland’s Revenue Commissioners, the country’s tax authority, has withdrawn a compliance notice that aimed to extend the 1% tax on equities transactions to contracts for difference after the Finance Ministry said it would review the relevant legislation.
The climb-down ends two weeks of uncertainty following a Compliance Notice published by the Revenue Commissioners on March 17. That led to furious behind-the-scenes lobbing by the Irish Stock Exchange, Dublin-based brokers and international investors.
The Finance Ministry said on Friday [March 31]: “The Minister for Finance, Brian Cowen, today indicated that, in view of uncertainties and difficulties of which he became aware, he plans to review the law as it relates to stamp duty on share transactions which underlie trading in contracts for difference based on Irish equities.”
Following the statement, the Revenue Commissioners issued their own statement saying that the government’s plans “to review the law” had seen “the Compliance Notices … withdrawn.” In an email, a spokesman declined comment on how the Compliance Notice came to be issued or what role the Irish Stock Exchange played in getting it withdrawn.
Before today’s withdrawal of the controversial compliance measure, there had been fears that Dublin’s burgeoning hedge fund business would be crimped by the imposition of a 1% tax on CFDs. Market watchers noted that the absence of a tax on CFDs in the United Kingdom would have inevitably seen business transfer to London.
The Finance Ministry said it would consult with the Revenue Commissioners and with market participants about the matter and make an announcement in the country’s 2007 budget. The Ministry added that it was imperative for Irish equities to “continue to be a modern, liquid market, conducive to capital acquisition by Irish firms.”
Contact Bob Keane with questions or comments at firstname.lastname@example.org.