Business reaction: Business groups yesterday expressed their disappointment at Minister for Finance Brian Cowen's decision to plough ahead with the abolition of the remittance basis of taxation.

Companies and their representative bodies have been lobbying the Minister since he first announced his intention to scrap the system in December's budget. It allows people working for overseas companies in Ireland to receive their salary elsewhere and pay tax only on the money they bring into the State. Many believe the abolition will deter foreign companies from setting up in the Republic and had hoped he would change his mind before the release of yesterday's Finance Bill.

Aileen O'Donoghue, director of Financial Services Ireland, called on the Government to seriously rethink its decision, saying the abolition of the system will have "severe" adverse consequences on the economy.

"Domestic and foreign-owned operations will find it more difficult to attract senior professionals on secondment and to retain high-calibre personnel," she said.

"This threatens current and pending projects."

Brain Purcell, chairman of the Institute of Certified Public Accountants in Ireland, said he was disappointed that the Minister hadn't laid down any transitional arrangements for foreign executives of multinational companies.

He said failure to do this sent out the wrong signal to multinationals, whose executives had entered into contracts with the expectation that the long-standing remittance basis would be retained.