Car importer GEFCO has welcomed news that its £3m rates bill is to be scrapped.

Minister for communities and local government, Bob Neill, announced at the company's Sheerness site last week that the back-dated port liabilities fee will be abolished.

This will happen under the Localism and De-centralisation Bill, which is due to be introduced in parliament this month and could become law by next spring.

But Mr Neill also announced that a freeze on the collection of the rates will be extended if the bill is not passed by the time the current freeze expires on March 31.

In 2008, the Valuation Office Agency, part of HM Revenue and Customs, imposed additional business rates on port companies, backdated to April 2005, after discovering a loophole in the rules governing contributions to port owners by companies moving goods in and out of the UK.

The French-owned firm brings in thousands of Peugeot and Citroen cars through the docks and has a storage capacity of 16,000 vehicles.

Howard Nash, automotive director at GEFCO, said: "The issue of backdated port rates has had a huge impact on local businesses at Sheerness Port.

"Companies have been affected on an international and local level.

"We are now focused on ensuring we are unified in our approach to fully resolving this issue.

"Any progress towards eliminating backdated rates will help businesses to start looking at reinvestment.

"We will continue to grow our operations at Sheerness as well as to expand our operations in the UK, including opening a new site in Portbury."

Mr Neill said: "Hearing about Sheerness's journey first hand has confirmed for me that our decision to waive and repay these unexpected port taxes was a victory for common sense.

"They can now move forward unburdened by these unexpected debts.

"It's clear to me that our swift action has saved many port-based businesses and jobs and ensured that Britain remains a powerful force in European exports."