|
|
Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.
|
63.— Schedule 24 to the Principal Act is amended—
|
|
| |
(a) in paragraph 4 by inserting the following after subparagraph (2):
|
|
| |
“(2A) For the purposes of subparagraph (2) but subject to subparagraph (3), where credit is to be allowed against corporation tax for foreign tax in respect of any income of a company (in this subparagraph referred to as ‘that income’), being income which is taken into account in computing the profits or gains of a trade carried on by the company in an accounting period, the relevant income shall be so much of the profits or gains of the trade for that accounting period as is determined by the formula—
|
|
| |
P x I
|
|
| |
R
|
|
| |
where—
|
|
| |
P is the amount of the profits or gains of the trade for the accounting period before deducting any amount under paragraph 7(3)(c),
|
|
| |
I is the amount of that income for the accounting period before deducting any disbursements or expenses of the trade, and
|
|
| |
R is the total amount receivable by the company in the carrying on of the trade in the accounting period.”,
|
|
| |
(b) in subparagraph (2) of paragraph 9B, by substituting “a relevant company” for “an Irish company”,
|
|
| |
(c) by inserting the following after paragraph 9E:
|
|
| |
“9F (1) (a) In this paragraph—
|
|
| |
the ‘aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant interest of the company for 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 the interest not been chargeable to tax;
|
|
| |
‘foreign company’ means a company resident outside the State;
|
|
| |
‘foreign tax’, in relation to interest receivable by a company, means tax which—
|
|
| |
(i) under the laws of any foreign territory has been deducted from the amount of the interest,
|
|
| |
(ii) corresponds to income or corporation tax,
|
|
| |
(iii) has not been repaid to the company;
|
|
| |
‘unrelieved foreign tax’ has the meaning assigned to it in subparagraph (2).
|
|
| |
(b) For the purposes of this paragraph—
|
|
| |
(i) interest which is receivable by a company (in this clause referred to as the ‘receiving company’) from a company is relevant interest if—
|
|
| |
(I) the interest falls to be taken into account in computing the trading income of a trade carried on by the receiving company,
|
|
| |
(II) the interest arises from a source within a territory in regard to which arrangements have the force of law, and
|
|
| |
(III) one of those companies is the 25 per cent subsidiary of the other or both companies are 25 per cent subsidiaries of a third company,
|
|
| |
(ii) subject to subclause (iii), a company shall be deemed to be a 25 per cent subsidiary of another company if and so long as not less then 25 per cent of its ordinary share capital would be treated as owned directly or indirectly by that other company if section 9 (other than subsection (1) of that section) were to apply for the purposes of this paragraph,
|
|
| |
(iii) a company (in this subclause referred to as a ‘subsidiary company’) shall not be deemed to be a 25 per cent subsidiary of another company (in this subclause referred to as the ‘parent company’) at any time if the percentage—
|
|
| |
(I) of any profits, which are available for distribution to equity holders, of the subsidiary company at such time to which the parent company is beneficially entitled at such time, or
|
|
| |
(II) of any assets, which are available for distribution to equity holders on a winding up, of the subsidiary company at such time to which the parent company would be beneficially entitled at such time on a winding up of the subsidiary company,
|
|
| |
is less than 25 per cent of such profits or assets (as the case may be) of the subsidiary company at such time, and sections 413, 414, 415 and 418 shall, with any necessary modifications but without regards to section 411(1)(c) in so far as it relates to those sections, apply to the determination of the percentage of those profits or assets (as the case may be) to which a company is beneficially entitled as they apply to the determination for the purposes of Chapter 5 of Part 12 of the percentage of any such profits or assets to which a company is so entitled.
|
|
| |
(2) Where, as respects any relevant interest 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 corporation tax and, accordingly, the amount of income representing the interest is treated under paragraph 7(3)(c) as reduced by that part of the foreign tax, then an amount determined by the formula—
|
|
| |
100 — R x D
|
|
| |
100
|
|
| |
where—
|
|
| |
R is the rate per cent specified in section 21(1), and
|
|
| |
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,
|
|
| |
shall be treated for the purposes of subparagraph (3) as unrelieved foreign tax of that accounting period.
|
|
| |
(3) The aggregate amount of corporation tax payable by a company for an accounting period in respect of relevant interest of the company for the accounting period from foreign companies shall be reduced by the unrelieved foreign tax of that accounting period.”,
|
|
| |
and
|
|
| |
(d) by inserting the following after paragraph 9F (inserted by paragraph (c)):
|
|
| |
“Dividends paid by companies that are taxed as a group under the law of a territory outside the State
|
|
| |
9G (1) This paragraph applies in any case where—
|
|
| |
(a) under the law of a territory outside the State, tax is payable by a company (in this paragraph referred to as the ‘responsible company’) resident in that territory in respect of the aggregate profits, or aggregate profits and aggregate gains, of that company and one or more other companies (in this paragraph referred to as the ‘consolidated companies’), taken together as a single taxable entity, and
|
|
| |
(b) a dividend is paid—
|
|
| |
(i) by any one of the consolidated companies (in this paragraph referred to as the ‘paying company’) to a company that is not one of the consolidated companies (in this paragraph referred to as the ‘recipient company’), or
|
|
| |
(ii) by a company that is not one of the consolidated companies (in this paragraphreferred to as the ‘third company’) to any one of the consolidated companies.
|
|
| |
(2) (a) Where this paragraph applies, then for the purposes of allowing credit under this Schedule for foreign tax in respect of profits attributable to dividends this Schedule shall apply with any necessary modifications as if—
|
|
| |
(i) the consolidated companies, taken together, were a single company (in this paragraph referred to as the ‘single company’),
|
|
| |
(ii) any dividend paid by any of the consolidated companies to a recipient company was paid by the single company,
|
|
| |
(iii) any dividend paid by a third company to any one of the consolidated companies was paid to the single company,
|
|
| |
(iv) the single company is related to the recipient company if the paying company is related to the recipient company,
|
|
| |
(v) the third company is related to the single company if the third company is related to that one of the consolidated companies to which it paid the dividend, and
|
|
| |
(vi) the single company is resident in the territory in which the responsible company is resident,
|
|
| |
so that the relevant profits for the purposes of paragraph 8 is a single aggregate figure in respect of the single company and the foreign tax paid by the responsible company is foreign tax paid by the single company.
|
|
| |
(b) For the purposes of this paragraph—
|
|
| |
(i) a single company that is treated as paying a dividend shall be treated as connected with a relevant company (within the meaning given to it in paragraph 9B) in relation to the dividend if the company that paid the dividend is connected with that relevant company,
|
|
| |
(ii) a relevant dividend (within the meaning given to it in paragraph 9A) paid by any one of the consolidated companies to a recipient company will be treated as a relevant dividend paid by the single company to that recipient company,
|
|
| |
(iii) references in paragraph 8 to ‘body corporate’ shall include references to a single company within the meaning of this paragraph.”.
|
