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FINANCE (NO. 2) ACT, 1992
Income Tax and Corporation Tax
Amendment of section 41 (basis of relief from corporation tax) of Finance Act, 1980.
1. — Section 41 of the Finance Act, 1980 , is hereby amended by the addition of the following subsection after subsection (8):
“(9) (a) Notwithstanding any other provision of this section—
(i) the Minister may by notice in writing given to a qualified company reduce the fraction (hereafter in this subsection referred to as ‘the relief’) by which corporation tax payable, so far as it is referable to income from relevant trading operations, falls, or would but for this subsection fall, to be reduced under subsection (2) by specifying in the notice such lower fraction (hereafter in this subsection referred to as the ‘revised relief’) as the Minister deems appropriate by which the said corporation tax is to be reduced where the Minister is satisfied that—
(I) some or all of the shares in the qualified company are owned directly or indirectly (within the meaning of section 156 of the Corporation Tax Act, 1976 ) by a company or companies (hereafter in this subsection referred to as ‘the investors’) resident outside the State or the qualified company is resident outside the State and is trading in the State through a branch or agency,
(II) the qualified company (hereafter in this subparagraph referred to as the ‘first-mentioned qualified company’) is carrying on, or is about to carry on, a trade in the State which includes or consists of relevant trading operations and with levels of activity and employment in the State in relation to those operations either in the first-mentioned qualified company, or in another qualified company with which the first-mentioned qualified company has entered into an agreement in order to carry on such operations, which, having regard to the certificate issued or to be issued to the first-mentioned qualified company or the other qualified company, as the case may be, under the relevant subsection, are substantial and contribute, or will contribute, to the development of the Area as an International Financial Services Centre or the development of the airport, as the case may be,
(III) the manner in which the investors or the qualified company, as the case may be, would, but for this subsection, be subject to relevant taxation in respect of income from relevant trading operations would result in the qualified company ceasing to carry on relevant trading operations carried on by it, or not carrying on relevant trading operations, as the case may be, in the State, and
(IV) the revised relief would ensure that all or a substantial part of the relevant trading operations of the qualified company will continue to be carried on, or will be carried on, as the case may be, in the State to an extent that they will continue to contribute or will contribute to the development of the Area as an International Financial Services Centre or the development of the airport, as the case may be,
and where the Minister has given such notice, subsection (2) shall apply as if the revised relief were substituted for the relief:
Provided that the reduction of the relief so as to arrive at the revised relief shall be no greater than is necessary to secure the result specified in clause (IV),
(ii) the Minister may, subject to the proviso to sub-paragraph (i), by notice given in writing to the qualified company—
(I) increase or decrease the revised relief specified in a preceding notice given to the qualified company under this subsection, or
(II) reinstate the relief,
and where the Minister has given such notice, sub-paragraph (i) shall apply as if the revised relief specified in the notice given under that subparagraph were the revised relief specified under this subparagraph or the relief shall be reinstated, as the case may be.
(b) A notice given by the Minister under this subsection specifying a revised relief or an increase or decrease in such revised relief or a reinstatement of the relief shall have effect from the date specified in the notice which may be a date preceding the date on which the said notice is given.
(c) This subsection shall be construed together with section 39A (inserted by the Finance Act, 1981 ) and with section 39B (inserted by the Finance Act, 1987 ):
Provided that, in so far as it is to be so construed together with the said section 39A, it shall be so construed only in so far as the relevant trading operations carried on by a qualified company within the meaning of that section are trading operations which could be certified by the Minister as relevant trading operations for the purposes of the said section 39B if they were carried on in the Area rather than the airport.
(d) In this subsection—
‘the airport’ and ‘the Area’ have, respectively, the same meanings as they have in sections 39A and 39B;
‘the Minister’ means the Minister for Finance;
‘qualified company’ includes, subject to the proviso to paragraph (c), a company which has not carried on trading operations in the Area or the airport and which intends to carry on trading operations which will be relevant trading operations;
‘relevant subsection’ means subsection (2) of section 39A or subsection (2) of section 39B, as the case may be;
‘relevant taxation’, in relation to an investor or a qualified company, means any tax imposed under the laws of any state by reason of the relief.”.
Amendment of section 45 (distributions) of Finance Act, 1980.
2. — Section 45 of the Finance Act, 1980 , is hereby amended by the insertion after subsection (3) of the following proviso to that subsection:
“Provided that where, as respects an accounting period, corporation tax payable by a company is, by virtue of subsection (9) (inserted by section 1 of the Finance (No. 2) Act, 1992) of section 41, reduced by the revised relief (within the meaning of the said subsection (9)), the tax credit in respect of a distribution treated for the purposes of this section as made for the accounting period shall be an amount determined by the formula—
D is the amount or value of the distribution, and
E is an amount determined by the formula—
T is the corporation tax payable by the company for the accounting period, so far as it is referable to income from the sale of those goods (within the meaning of section 41), after deducting from that tax such amount as falls to be deducted under the said section 41, and
I is the said income from the sale of those goods.”.
Amendment of provisions relating to interest payments by certain deposit takers.
3. —Chapter IV of Part I of the Finance Act, 1986 , is hereby amended—
(a) in subsection (1) of section 31—
(i) by the insertion of the following definition after the definition of “deposit”:
“‘foreign currency’ means a currency other than the currency of the State;”,
(ii) in the definition of “relevant deposit”—
(I) by the addition to paragraph (e) (inserted by the Finance Act, 1991 ) of the following additional proviso after the proviso to that paragraph:
“Provided also that this paragraph shall not apply to a deposit denominated in a foreign currency which is made on or after the operative date,”,
(II) by the substitution in paragraph (ee) (inserted by the Finance Act, 1992 ) of the following sub-paragraph for subparagraph (i):
“(i) which is made on or after the operative date by, and the interest on which is beneficially owned by—
(I) a company which is or will be within the charge to corporation tax in respect of the interest, or
(II) a pension scheme,
(b) in subsection (1) of section 37A (inserted by the Finance Act, 1992 ), by the insertion of the following paragraphs after paragraph (a):
“(aa) the account shall not be denominated in a foreign currency;
(aaa) the account shall not be connected with any other account held by the account holder or any other person; and for this purpose an account is connected with another account if—
(i) (I) either account was opened with reference to the other account, or with a view to enabling the other account to be opened on particular terms, or with a view to facilitating the opening of the other account on particular terms, and
(II) the terms on which either account was opened would have been significantly less favourable to the account holder if the other account had not been opened,
(ii) the terms on which either account is operated are altered or affected in any way whatsoever because of the existence of the other account;”,
(c) in subsection (1) of section 37B (inserted by the Finance Act, 1992 ), by the substitution of the following paragraph for paragraph (c):
“(c) declares that at the time the declaration is made the interest on the deposit in respect of which the declaration is made—
(i) (I) is beneficially owned by a company within the charge to corporation tax, and
(II) will be included in the profits of the company on which it is to be charged to corporation tax,
(ii) is beneficially owned by a pension scheme,”.