The Minister for Finance, Mr Cowen, must scrap capital duty on shares if he wants to secure additional foreign direct investment for the Republic, according to Financial Services Ireland (FSI).

In its pre-Budget submission, the IFSC representative group calls on Mr Cowen to make the Republic more "capital friendly" by abolishing capital duty.

"The existing capital duty regime is not consistent with the development of a cutting-edge financial centre," said FSI director, Ms Aileen O'Donoghue.

"If we are serious about being the European headquarter location of choice for foreign countries, we must deal with the issue."

Current rules require companies to pay duty of 1 per cent on capital used for transactions such as the formation of a company or the transfer of a company's registered office to the State.

FSI argues that unless the Republic becomes more capital-friendly, holding companies will continue to be located in competitor countries.

"In a nutshell, we want the decision-makers here," Ms O'Donoghue said.

FSI is also calling for the abolition of stamp duty on ATM, laser and credit cards.