Finance Act, 1995

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Amendment of section 39C (credit for foreign tax) of Finance Act, 1980.

63.—Section 39C (inserted by the Finance Act, 1994 ) of the Finance Act, 1980 , is hereby amended, as respects accounting periods ending on or after the 1st day of January, 1995—

(a) in subsection (1)—

(i) in paragraph (a), in the definition of “relevant foreign tax” by the insertion after paragraph (i) of that definition of the following:

“(ia) which corresponds to income tax or corporation tax,”,

(ii) in paragraph (b)—

(I) by the substitution for subparagraph (i) of the following subparagraph:

“(i) the amount of the corporation tax which would, apart from subsection (2), be payable by a company and which is attributable to an amount receivable from the sale of goods shall be an amount equal to 10 per cent, of the amount of the income of the company referable to the amount so receivable;”,

(II) in subparagraph (ii) by the insertion after “shall” of “, subject to section 23 (4) (as amended by the Finance Act, 1995) of the Corporation Tax Act, 1976 ,”, and

(III) in subparagraph (iii) by the insertion after “which” of “, for the purposes of subsection (2) of the said section,”,

(b) in subsection (2) by the substitution for “nine-tenths of so much of” of “so much of nine-tenths of”, and

(c) by the insertion of the following subsection:

“(3) Where, as respects a relevant accounting period, corporation tax payable by a company is, by virtue of subsection (9) (inserted by the Finance (No. 2) Act, 1992 ) of section 41, reduced by a fraction, which is referred to in the said subsection (9) as the ‘revised relief’, then, in computing the reduction, if any, under subsection (2) of corporation tax payable by the company for the relevant accounting period, being corporation tax attributable to an amount receivable from the sale of goods which is an amount receivable in the course of relevant trading operations, within the meaning of section 39B, this section shall apply as if—

(a) in subparagraph (i) (as inserted by the Finance Act, 1995) of subsection (1) (b) the reference to 10 per cent, were a reference to a rate per cent, determined by the formula—

C × (1 − D)

where—

C is the rate per cent, of corporation tax, specified in section 1 (1) of the Corporation Tax Act, 1976 , for the financial year in which the relevant accounting period ends, and

D is the fraction so referred to,

and

(b) the reference in subsection (2) to nine-tenths were a reference to a fraction determined by the formula—

where C and D have the meanings assigned to them in paragraph (a).”.