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Eurocrats take aim at IT tax breaks

Money to be doled out on headcount basis

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Changes that the European Union has demanded on tax subsidies and breaks are threatening to put a halt to investments in the growth of IT, it has emerged.

A representative of the Cote D'Azur development board, which has science park Sophia Antipolis under its wing, told The Register yesterday that the move meant individual regions of member countries will be subject to central government control.

The EU, she said, wants to standardise tax breaks and subsidies across the community, with the amount of money available to individual countries proportional to the population of member states.

Towards the end of last year, she said, the European Union asked member governments to examine subsidies and tax breaks they were offering in the way of individual investment.

That review was completed in mid-spring and in Sophia Antipolis, which is populated by large IT firms including Lucent, Nortel, TI and hundreds of others, lost out to other French regions.

But the move has serious implications for areas of the United Kingdom too. Central government here has already conducted a similar review, but information about which regions both here and abroad have become the winners and losers is not yet in the public domain.

Development areas in the UK include Teesside, the so-called 'Silicon Fen' region close to Cambridge, and the Scottish 'Silicon Glen' region.

There is fierce competition, for example, between the Scottish development agency, Locate in Scotland, and the Irish Development Agency. The Republic of Ireland has a much smaller population than the UK, suggesting that it may well have a bigger slice of the EU cake. ®

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