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Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.
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31.—(1) Schedule 24 of the Principal Act is amended—
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(a) in paragraph 9A—
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(i) in subparagraph (4)(b) by substituting “5 per cent” for “25 per cent”, and
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(ii) in subparagraph (5)(a) by deleting “, in respect of taxes covered by these arrangements,”,
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(b) in paragraph 9B—
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(i) in subparagraph (2) by substituting the following for “underlying tax to be taken into account.”:
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“underlying tax to be taken into account: and for this purpose there shall, subject to Part 1, be taken into account as if it were tax payable under the law of the territory in which the third company is resident—
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(i) any income tax or corporation tax payable in the State by the foreign company in respect of its profits, and
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(ii) any tax which, under the law of any other territory, is payable by the foreign company in respect of its profits.”,
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(ii) in subparagraph (5)—
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(I) in clause (b)(i) by substituting “5 per cent” for “25 per cent”, and
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(II) in clause (b)(iii) by substituting “5 per cent” for “10 per cent”,
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and
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(c) by adding the following after paragraph 9D—
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“Treatment of unrelieved foreign tax
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9E. (1) (a) In this paragraph—
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‘the aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant dividends received by the company in the accounting period from foreign companies’ means so much of the corporation tax which, apart from this paragraph, would be payable by the company for that accounting period as would not have been payable had those dividends not been received by the company;
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‘foreign company’ means a company resident outside the State;
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‘unrelieved foreign tax’ has the meaning assigned to it in subparagraph (2).
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(b) For the purposes of this paragraph, a dividend is a relevant dividend if it is received by a company (in this clause referred to as the ‘receiving company’) from a company which is not resident in the State (in this clause referred to as the ‘paying company’) and the paying company is related to the receiving company (within the meaning of paragraph 9B(5)(b)).
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(2) Where as respects a relevant dividend received in an accounting period by a company any part of the foreign tax cannot, apart from this paragraph, be allowed as a credit against any of the Irish taxes and, accordingly, the amount of income representing the dividend is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount determined by the formula—
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where—
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R is the rate per cent specified in section 21A(3), and
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D is the amount of the part of the foreign tax by which the income is to be treated under paragraph 7(3)(c) as reduced,
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shall be treated for the purposes of subparagraph (3) as unrelieved foreign tax of that accounting period.
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(3) The aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies shall be reduced by the unrelieved foreign tax of that accounting period.
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(4) Where the unrelieved foreign tax in relation to an accounting period of a company exceeds the aggregate amount of corporation tax payable by the company for the accounting period in respect of relevant dividends received by the company in that accounting period from foreign companies, the excess shall be carried forward and treated as unrelieved foreign tax of the next succeeding accounting period, and so on for succeeding accounting periods.”.
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(2) This section comes into operation on such day or days as the Minister for Finance by order appoints, either generally or with reference to any particular purpose or provision, and different days may be so appointed for different purposes or different provisions.
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