Finance Act 2008

Amendment of Part 24 (taxation of profits of certain mines and petroleum taxation) of Principal Act.

45.— (1) Part 24 of the Principal Act is amended—

(a) by renumbering section 697 as section 696A, and

(b) by inserting the following after section 696A (renumbered by paragraph (a)):

“Chapter 3

Profit Resource Rent Tax

Interpretation and application (Chapter 3).

696B.— (1) In this Chapter—

‘ cumulative field expenditure ’, in relation to an accounting period of a company in respect of a taxable field, means the aggregate of the taxable field expenditure of the company in respect of the taxable field—

(a) for that accounting period, and

(b) for any preceding accounting period beginning on or after 1 January 2007;

‘ cumulative field profits ’, in relation to an accounting period of a company in respect of a taxable field, means the aggregate of the net taxable field profits of the company in respect of the taxable field—

(a) for that accounting period, and

(b) for any preceding accounting period beginning on or after 1 January 2007,

after deducting the amount of any loss incurred in respect of the taxable field for any such period;

‘ net taxable field profits ’, in relation to an accounting period of a company, means the taxable field profits of the company for the accounting period after deducting the amount of corporation tax (if any) which would, apart from this Chapter, be payable by the company for the accounting period if the tax were computed on the basis of those profits;

‘ profit ratio ’, in relation to an accounting period of a company in respect of a taxable field, means an amount determined by the formula—

A

B

where—

A is the cumulative field profits of the company in respect of the taxable field in relation to that accounting period, and

B is the cumulative field expenditure of the company in respect of the taxable field in relation to that accounting period;

‘ profit resource rent tax ’ has the meaning given to it in section 696C;

‘ specified licence ’ means—

(a) an exploration licence, or a reserved area licence, that is granted on or after 1 January 2007, or

(b) a licensing option;

‘ taxable field ’ means an area in respect of which a petroleum lease entered into following on from a specified licence is in force;

‘ taxable field expenditure ’, in relation to an accounting period of a company, means the aggregate of the amounts of capital expenditure which consist of—

(a) abandonment expenditure,

(b) development expenditure, and

(c) exploration expenditure,

incurred by the company for the accounting period in respect of a taxable field;

‘ taxable field profits ’, in relation to an accounting period of a company, means the amount of the petroleum profits of the company in respect of a taxable field, after making all deductions and giving or allowing all reliefs that for the purposes of corporation tax are made from, or given or allowed against, or are treated as reducing—

(a) those profits, or

(b) income or chargeable gains, if any, included in those profits.

(2) For the purposes of this Chapter—

(a) the interpretations in section 684 shall apply, with any necessary modifications, in relation to expenditure and activities carried on under a specified licence as they would apply in relation to expenditure and activities carried on under a licence within the meaning of section 684 if such a licence was a specified licence, and

(b) capital expenditure incurred on or after 1 January 2007 by a company in an area which is not a taxable field but which subsequently becomes a taxable field (or part of such a field) shall be treated as if it had been incurred by the company on the day on which the area first becomes a taxable field (or part of such a field).

(3) (a) Where a company carries on a petroleum trade and that petroleum trade includes petroleum activities carried on under a specified licence, such activities shall, for the purposes of this Chapter, be treated in respect of each taxable field as a separate petroleum trade distinct from all other activities carried on by the company as part of the trade.

(b) For the purposes of paragraph (a), any necessary apportionment shall be made in computing taxable field profits or taxable field expenditure of a company and the method of apportionment adopted shall be such method as appears to the inspector or on appeal the Appeal Commissioners to be just and reasonable.

(c) Subject to paragraph (d) the provisions of sections 687 to 690 shall apply for the purposes of this Chapter in relation to any activities treated under paragraph (a) as a separate trade as they apply to a petroleum trade within the meaning of those sections.

(d) For the purposes of applying this Chapter, in relation to an accounting period of a company in respect of a taxable field, no account shall be taken of any charges paid, interest payable or a loss incurred—

(i) by any other company, or

(ii) by the first-mentioned company,

in respect of activities other than activities in relation to that field.

Charge to profit resource rent tax.

696C.— (1) Where for an accounting period of a company the profit ratio of the company in relation to a taxable field is equal to 1.5 or more, an additional duty of corporation tax (in this Chapter referred to as a ‘profit resource rent tax’) shall be charged on the profits of the company in accordance with the provisions of this Chapter.

(2) Profit resource rent tax shall be charged on the profits to which this Chapter applies of a company for an accounting period at the rate of—

(a) 5 per cent, where the profit ratio is less than 3,

(b) 10 per cent, where the profit ratio is equal to or greater than 3 and less than 4.5,

(c) 15 per cent, where the profit ratio is equal to or greater than 4.5.

(3) The profits to which this Chapter applies as respects any taxable field for an accounting period of a company shall—

(a) in respect of any accounting period in relation to which—

(i) the profit ratio is equal to or greater than 1.5, and

(ii) the profit ratio for the immediately preceding accounting period was less than 1.5,

be determined by the formula—

{A — (B x 1.5)} x 1010010

100 — R

where—

A is the cumulative field profits of the company in respect of the taxable field in relation to the accounting period,

B is the cumulative field expenditure of the company in respect of the taxable field in relation to the accounting period, and

R is the rate per cent specified in section 21A(3),

and

(b) in respect of any other accounting period of the company, be the taxable field profits of the company in respect of the taxable field for the accounting period.

Provisions relating to groups (Chapter 3).

696D.— (1) Where taxable field expenditure in respect of a taxable field is incurred by a company (in this section referred to as the ‘first company’) and

(a) another company is a wholly-owned subsidiary of the first company, or

(b) the first company is, at the time the taxable field expenditure is incurred, a wholly-owned subsidiary of another company (in this section referred to as the ‘parent company’),

then, the expenditure or so much of it as the first company specifies, may at the election of that company be deemed to be taxable field expenditure in respect of the taxable field incurred—

(i) in the case referred to in paragraph (a), by such other company (being a wholly-owned subsidiary of the first company) as the first company specifies, and

(ii) in the case referred to in paragraph (b), by the parent company or by such other company (being a wholly-owned subsidiary of the parent company) as the first company specifies.

(2) Where under subsection (1) taxable field expenditure incurred by a first company is deemed to have been incurred by another company (in this subsection referred to as the ‘other company’)—

(a) the expenditure shall be deemed to have been incurred by the other company at the time at which the expenditure was actually incurred by the first company, and

(b) in the application of this Chapter the expenditure shall—

(i) be deemed to have been incurred by the other company for the purposes of determining the cumulative field expenditure of that company, and

(ii) be deemed not to have been incurred by the first company for the purposes of determining the cumulative field expenditure of that company.

(3) The same expenditure shall not be taken into account in relation to the determination of cumulative expenditure for more than one taxable field by virtue of this section.

(4) Subsection (5) of section 694 applies for the purposes of subsection (1) as it applies for the purposes of that subsection.

Returns (Chapter3).

696E.— (1) In this section ‘ prescribed form ’ means a form prescribed by the Revenue Commissioners or a form used under the authority of the Revenue Commissioners, and includes a form which involves the delivery of a statement by any electronic, photographic or other process approved of by the Revenue Commissioners.

(2) A company carrying on petroleum activities under a specified licence shall, in addition to the return required to be delivered under section 951, prepare and deliver to the Collector-General at the same time as, and together with, the return required under section 951 on or before the specified return date for the chargeable period a full and true statement in a prescribed form of the details required by the form in respect of—

(a) the amounts constituting the aggregate of the cumulative field expenditure for each field,

(b) the amounts constituting the aggregate of the cumulative field profits for each field,

(c) the breakdown of the amounts specified in paragraphs (a) and (b), and

(d) the amount of profit resource rent tax, if any, payable in respect of each field,

and of such further particulars in relation to this Chapter as may be required by the prescribed form.

(3) An officer of the Revenue Commissioners may make such enquiries or take such actions within his or her powers as he or she considers necessary for the purposes of determining the accuracy or otherwise of any details or particulars contained in the statement referred to in subsection (2).

(4) Subsections (9) and (10) of section 951 shall apply to a statement required to be delivered under this section as they apply to a return required to be delivered under that section, and for that purpose a reference in those subsections to a return, other than a reference to the specified return date for the chargeable period, shall be construed as a reference to a statement under this section.

(5) Section 1052 shall apply to a failure by a person to deliver a statement under this section or the details or particulars referred to in subsection (3) as it applies to a failure to deliver a return referred to in section 1052.

Collection and general provisions.

696F.— (1) The provisions of the Corporation Tax Acts relating to—

(a) assessments to corporation tax,

(b) appeals against such assessments (including the rehearing of appeals and the statement of a case for the opinion of the High Court), and

(c) the collection and recovery of corporation tax,

shall apply in relation to a profit resource rent tax charged under section 696C as they apply to corporation tax charged otherwise than under this Chapter.

(2) (a) Any amount of profit resource rent tax payable in accordance with this Chapter without the making of an assessment shall carry interest at the rate of 0.0273 per cent for each day or part of a day from the date when the amount becomes due and payable until payment.

(b) Section 1080 shall apply in relation to interest payable under paragraph (a) as it applies in relation to interest payable under section 1080.”.

(2) This section is deemed to have applied in the case of profits in respect of any petroleum lease entered into following on from a licensing option or from an exploration licence, or a reserved area licence, awarded by the Minister for Communications, Energy and Natural Resources after 1 January 2007.