Finance Act, 1998

Amendment of section 5 (supply of services) of Principal Act.

107.Section 5 of the Principal Act is hereby amended—

(a) in subsection (6)—

(i) by the insertion in paragraph (dd) (inserted by the Act of 1997) after “a telecommunications service” of “, or a telephone card as defined in subsection (6A),”,

(ii) by the insertion of the following paragraph after paragraph (dd):

“(ddd) The place of supply of a telecommunications service or of a telephone card as defined in subsection (6A) shall be deemed, for the purposes of this Act, to be the State when that service is supplied by a taxable person from an establishment in the State and it is received, otherwise than for a business purpose, by a person whose usual place of residence is situated outside the Community, and it is effectively used and enjoyed in the State.”,

(iii) by the insertion in paragraph (e) (inserted by the Finance Act, 1986 ) after “specified in the Fourth Schedule” of “with the exception of the supply of services referred to in paragraphs (ddd) and (ee) in the circumstances specified in those paragraphs respectively and”, and

(iv) by the insertion of the following paragraph after paragraph (e):

“(ee) The place of supply of services of the description specified in paragraph (v) of the Fourth Schedule shall be deemed, for the purposes of this Act, to be the State, when those services are supplied by a person in the course or furtherance of business established in the State and they are received, otherwise than for a business purpose, by a person whose usual place of residence is situated outside the Community, and they are effectively used and enjoyed in the State.”,

and

(b) by the insertion of the following subsection after subsection (6):

“(6A) (a) Subject to paragraph (b), where the supply of a telephone card is taxable within the State and that telephone card is subsequently used outside the Community for the purpose of accessing a telecommunications service, the place of supply of that telecommunications service shall be deemed to be outside the Community and the supplier of that telephone card shall be entitled, in the taxable period within which that supplier acquires proof that that telephone card was so used outside the Community, to a reduction of the tax payable by that supplier in respect of the supply of that telephone card, by an amount calculated in accordance with paragraph (c).

(b) Where the supply of a telephone card is taxable in the State and the person liable for the tax on that supply is a person referred to in section 8(2)(a) who—

(i) is not entitled to a deduction, in accordance with section 12, of all of the tax chargeable in respect of that supply, or

(ii) is entitled to a deduction, in accordance with section 12, of the tax chargeable in respect of that supply because that card was acquired for the purposes of resale,

and that telephone card is subsequently used outside the Community for the purpose of accessing a telecommunications service, the place of supply of that telecommunications service shall be deemed to be outside the Community and the person who is taxable in respect of that supply of that telephone card shall be entitled, in the taxable period within which that person acquires proof that that telephone card was so used outside the Community, to a reduction of the tax payable in respect of that supply of that telephone card to the extent that that telephone card was so used.

(c) For the purposes of this subsection the amount of the reduction referred to in paragraph (a) shall be calculated as follows:

(A − B) ×

C

______

C + 100

where—

A equals the tax inclusive price charged by the supplier for that part of the right contained in the telephone card which was consumed in accessing the telecommunications service which was deemed to be supplied outside the Community,

B equals the tax inclusive price charged to the supplier for that part of the right contained in the telephone card which was consumed in accessing the telecommunications service which was deemed to be supplied outside the Community, and

C is the percentage rate of tax chargeable on the supply of the telephone card at the time of that supply by that supplier.

(d) Where a telephone card is used to access a telecommunications service, the value of the telephone card so used shall, for the purposes of section 10(2), be disregarded.

(e) In this subsection ‘telephone card’ means a card or a means other than money which confers a right to access a telecommunications service and for which, when the card or other means is supplied to a person other than for the purposes of resale, the supplier is entitled to a consideration in respect of the supply and for which the user of that card or other means is not liable for any further charge in respect of the receipt of the telecommunications service accessed by means of that card or other means.”.