Federal Treasurer Wayne Swan has announced Federal Government approval of a bid by James Hardie to relocate its corporate headquarters from the Netherlands to Ireland.

Mr Swan said the move is subject to strict assurances by James Hardie that the proposal will “not alter its binding commitments to make future payments to the Asbestos Injuries Compensation Fund”.

The company initiated the move to Ireland after the US Internal Revenue Service refused to recognise tax benefits in 2006 and 2007 under the relevant US/Netherlands treaty.

The decision, subject to a shareholder vote next year, is expected to deliver more favourable tax treatment for the construction materials manufacturer.

James Hardie revealed in May that a $US45 million ($52 million) loss in net operating cash flow would prevent the company contributing to the compensation fund this year.

Under a 2004 agreement, it is bound to pay 35% of annual cash flow to the scheme. The next payment is due in July 2011.