A new US-Ireland convention signed yesterday by the Minster for Finance, Mr McCreevy, and the US ambassador, Ms Jean Kennedy Smith, aims to stamp out tax evasion by people earning income in both countries. The Double Taxation Convention, to be ratified later this year, will also assist earners in avoiding double taxation by allocating taxing rights between the US and Ireland. Mr McCreevy said that the convention would facilitate further trade and investment growth.

According to the Department of Finance, stricter tests will be applied to people applying for benefits on dividends, interest and royalties arising in one country and paid to residents of the other. Withholding taxes on dividends are being reduced, and are being eliminated on interest and royalties.

"The US has for many years been Ireland's largest single source of inward investment. There are over 450 companies established by US investors in Ireland employing over 65,000 people. US companies account for a quarter of the workforce employed in manufacturing activities. In 1996, US investment accounted for almost 70 per cent of new jobs in IDA-assisted companies," a statement said. Ireland currently has double taxation conventions with 29 countries. Copies of the convention are available from the Government Publications Sales Office, Sun Alliance House, Molesworth St, Dublin 2, and can be viewed on the Revenue Commissioners web site on: http://www.revenue.ie/