Contributions to overseas pensions will become allowable against Irish tax under measures due to be announced in today's Finance Bill. The Bill, which gives effect to the fiscal measures announced by the Minister for Finance, Mr Cowen, on Budget Day will also contain a number of other taxation measures.

As well as the extension of tax relief on payments into overseas pensions, there will be significant new powers for the Revenue Commissioners, changes to the holding company regime and clarity on the tax treatment of firms which adopt new international accounting standards introduced at the start of this year.

The reasons for the changes in the tax relief on cross-border pension contributions are twofold, according to informed sources. They reflect the current trend in other jurisdictions and may also serve to encourage multinational companies to locate their group pension operations in Ireland.

The holding company regime introduced in the 2004 budget is being adjusted to take into account a number of issues raised by the European Commission.

The purpose of the regime was to encourage multinational companies to set up their headquarters in Ireland and, among other measures, it included favourable tax treatment of the sale of subsidiaries. Following consultation with Brussels, the tax treatment is to be extended to all companies, rather than just those that pass certain thresholds.

The Finance Bill is also expected to clarify a number of issues for companies that adopted new International Financial Reporting Standards at the start of this year. It is expected to indicate how accounts prepared on this basis will be adjusted for the purpose of calculating tax liabilities and whether there will be any interim administrative arrangements.

The Bill normally contains a number of anti-avoidance measures aimed at closing tax loopholes that have come to the attention of the Revenue Commissioners during the course of the year. The Revenue will also get a number of new powers to aid it in its pursuit of individuals who may have availed of single premium insurance products to evade tax.

The powers of the tax authorities under Section 1078 of the 1997 Taxes Consolidation Act to pursue those who aid and abet tax evasion are also expected to be enhanced.