Erin a place for firms to tap export-tax break

Irish officials, attempting to capitalize on a sweeping change in US tax law concerning exports, are urging American companies to consider setting up overseas operations at the Shannon industrial zone.

Because American ''domestic international sales corporations'' (DISCs) were assailed as an illegal export subsidy by the members of the General Agreement of Tariffs and Trade, Congress was forced this year to revise their tax status.

To continue to take advantage of US export tax breaks, American corporations exporting to foreign countries must, by Jan. 1, be incorporated and have managers set up within a group of nations approved by the US Treasury Department.

Ireland and 26 other nations have been approved so far. These are countries that have agreed to exchange information with the federal government on profits and taxes paid by American ''foreign sales corporations'' (FSCs), as DISCs are now known.

The main criterion to qualify as an FSC is that a company be incorporated outside the United States and be significantly contributing to export sales. An FSC must have at least one US board member and must hold board meetings outside the US.

As a result of the new law, some 9,000 of the old DISCs need to find new locations outside the US as FSCs.

Think Ireland, says William B. Moloney, assistant general manager of Shannon Free Airport Development Company. Mr. Moloney and other Irish officials are now on a whirlwind tour of the US, promoting Shannon as a prime location for these new foreign sales corporations. The Irish government promises to tax corporate profits for companies in Shannon at a maximum 10 percent rate. There is no withholding tax, and companies are free to repatriate or redistribute profits.

Moloney touts Shannon's location: six hours by air from New York, an hour from London. It is a duty-free port; major US banks and accounting firms are in the vicinity; and the Irish labor force is large and willing to work.

''We're looking for nonmanufacturing companies with a higher grade of employment,'' Moloney says. ''But we are not a tax haven. We don't want brass-plate operations. Each FSC must represent real economic activity.''

Mr. Moloney hopes luring FSCs to Shannon will be just the beginning.

''We're using the Shannon incentives,'' he says, ''as the thin end of a wedge to get FSCs in, and then we think that will convince the parent company that Ireland itself is a real attraction.''

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