Corporation Tax Act , 1976

PART I General System of Taxation

1 Introduction for companies of corporation tax in place of income tax, corporation profits tax and capital gains tax.

1.—(1) For the financial year 1974 and each subsequent financial year there shall be charged on profits of companies a tax, to be called corporation tax, at the rate of 50 per cent.

(2) For years of assessment after the year 197576 the provisions of the Income Tax Acts relating to the charge of income tax shall not apply to income of a company (not arising to it in a fiduciary or representative capacity) if—

(a) the company is resident in the State; or

(b) the income is, in the case of a company not so resident, within the chargeable profits of the company as defined for the purposes of corporation tax.

(3) A company shall not be chargeable to capital gains tax in respect of gains accruing to it so that it is chargeable in respect of them to corporation tax.

(4) Corporation profits tax shall not be chargeable for accounting periods or parts of accounting periods falling after the 5th day of April, 1976.

(5) In this Act, unless the context otherwise requires—

(a) “company” means any body corporate but does not include—

(i) a health board,

(ii) a vocational education committee established under the Vocational Education Act, 1930,

(iii) a committee of agriculture established under the Agriculture Act, 1931, or

(iv) a local authority, and for this purpose “local authority” has the meaning assigned to it by section 2 (2) of the Local Government Act, 1941, and includes a body established under the Local Government Services (Corporate Bodies) Act, 1971;

(b) “the financial year 1974” means the period of nine months beginning on the 1st day of April, 1974;

(c) “profits” means income and chargeable gains, and “chargeable gains” has the same meaning as in the Capital Gains Tax Act, 1975, but does not include gains accruing on disposals which were made before the 6th day of April, 1976;

(d) “trade” includes “vocation” and includes also an office or employment;

(e) such other words and expressions as are specified in section 155 (interpretation) have the meanings given by or indicated in that section.

2 Irish resident company distributions not chargeable to corporation tax.

2.—Except as otherwise provided by this Act, corporation tax shall not be chargeable on dividends and other distributions of a company resident in the State, nor shall any such dividends or distributions be taken into account in computing income for corporation tax.

3 Income tax on payments made or received by a company resident in the State.

3.—(1) No payment made after the 5th day of April, 1976, by a company resident in the State shall by virtue of this section or otherwise be treated for any purpose of the Income Tax Acts as paid out of profits or gains brought into charge to income tax; nor shall any right or obligation under the Income Tax Acts to deduct income tax from any payment be affected by the fact that the recipient is a company not chargeable to income tax in respect of the payment.

(2) Subject to the provisions of this Act, where after the 5th day of April, 1976, a company resident in the State receives any payment on which it bears income tax by deduction, the income tax thereon shall be set off against any corporation tax assessable on the company by an assessment made for the accounting period in which that payment falls to be taken into account for corporation tax (or would fall to be taken into account but for any exemption from corporation tax); and accordingly in respect of that payment the company, unless wholly exempt from corporation tax, shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(3) References in this section to payments received by a company apply to any received by another person on behalf of or in trust for the company, but not to any received by the company on behalf of or in trust for another person.

4 Claims for repayment of income tax deducted from receipts.

4.—Effect shall be given—

(a) to section 1 (2), and to that section as modified by sections 3 (2) and 8 (3), and

(b) so far as the exemptions from income tax conferred by the Corporation Tax Acts call for repayment of tax, to those exemptions,

by means of a claim.

5 Explanation of tax credit to be annexed to interest and dividend warrants.

5.—(1) Every warrant or cheque or other order drawn or made, or purporting to be drawn or made, in payment by any company of any dividend, or of any interest which is a distribution, shall have annexed thereto or be accompanied by a statement in writing showing—

(a) the amount of the dividend (distinguishing a dividend or any part of it which is paid out of capital profits of the company) or interest paid,

(b) (whether or not the recipient is a person entitled to a tax credit in respect thereof) the amount of the tax credit to which a recipient who is such a person is entitled in respect thereof, and

(c) the period for which the dividend or interest is paid.

(2) If a company fails to comply with any of the provisions of this section the company shall incur a penalty of £10 in respect of each offence but the aggregate amount of the penalties imposed under this section on any company in respect of offences connected with any one distribution of dividends or interest shall not exceed £100.

PART II Corporation Tax

6 General scheme of corporation tax.

6.—(1) Subject to any exceptions provided for by this Act, a company shall be chargeable to corporation tax on all its profits wherever arising.

(2) A company shall be chargeable to corporation tax on profits accruing for its benefit under any trust, or arising under any partnership, in any case in which it would be so chargeable if the profits accrued to it directly; and a company shall be chargeable to corporation tax on profits arising in the winding up of the company, but shall not otherwise be chargeable to corporation tax on profits accruing to it in a fiduciary or representative capacity except as respects its own beneficial interest (if any) in those profits.

(3) Corporation tax for any financial year shall be charged on profits arising in that year; but assessments to corporation tax shall be made on a company by reference to accounting periods, and the amount chargeable (after making all proper deductions) of the profits arising in an accounting period shall, where necessary, be apportioned between the financial years in which the accounting period falls.

(4) (a) Except as otherwise provided by this subsection, corporation tax assessed for an accounting period shall be paid in two equal instalments as follows—

(i) the first instalment within nine months from the end of the accounting period or, if it is later, within two months from the making of the assessment; and

(ii) the second instalment within fifteen months from the end of the accounting period or, if it is later, within two months from the making of the assessment.

(b) Where, in respect of a source of income, a company is within the charge to income tax under Schedule D for the year of assessment 1975-76, and in respect of that source of income comes within the charge to corporation tax on or before the 6th day of April, 1975, then (so long as the company continues to be within the charge to corporation tax in respect of that source of income) the second instalment of corporation tax assessed for an accounting period shall be paid as follows—

(i) in respect of the first accounting period for which the company is within the charge to corporation tax—

(I) where that accounting period is a period of twelve months, on or before the 1st day of January, 1977, and

(II) where that accounting period is a period of less than twelve months, within the like interval from the end of the accounting period as the 1st day of January, 1977, would have been from the end of the first accounting period if that accounting period had been a period of twelve months commencing on the date on which the company comes within the charge to corporation tax; and

(ii) in respect of any subsequent accounting period, within the like interval from the end of such accounting period as there was between the end of the first accounting period for which the company was within the charge to corporation tax and the date on or before which the second instalment of corporation tax for that first accounting period would have become payable if the assessment for that accounting period had been made on the day immediately following the end of that accounting period:

Provided that in no case shall the second instalment of corporation tax assessed for an accounting period become payable before the expiration of nine months from the end of the accounting period for which it is assessed or before the expiration of two months from the making of the assessment.

(5) Corporation tax shall be under the care and management of the Revenue Commissioners who may do all such acts as may be deemed necessary and expedient for raising, collecting, receiving and accounting for the tax in the like manner as they are authorised to do with relation to any other duties under their care and management.

(6) Section 1 of the Provisional Collection of Taxes Act, 1927, is hereby amended by the insertion of “and corporation tax” before “but no other tax or duty”.

(7) Section 39 of the Inland Revenue Regulation Act, 1890, is hereby amended by the insertion of “corporation tax,” before “stamp duties”.

7 Tax on company in liquidation.

7.—An assessment on a company's profits for an accounting period which falls after the commencement of the winding up of the company shall not be invalid because made before the end of the accounting period.

8 Companies not resident in the State.

8.—(1) A company not resident in the State shall not be within the charge to corporation tax unless it carries on a trade in the State through a branch or agency but, if it does so, it shall, subject to any exceptions provided for by this Act, be chargeable to corporation tax on all its chargeable profits wherever arising.

(2) For purposes of corporation tax the chargeable profits of a company not resident in the State but carrying on a trade there through a branch or agency shall be—

(a) any trading income arising directly or indirectly through or from the branch or agency, and any income from property or rights used by, or held by or for, the branch or agency (but so that this paragraph shall not include distributions received from companies resident in the State); and

(b) such chargeable gains as, but for this Act, would be chargeable to capital gains tax in the case of a company which is not resident in the State:

Provided that such chargeable profits shall not include chargeable gains accruing to the company on the disposal of assets which, at or before the time when the chargeable gains accrued, were not used in or for the purposes of the trade and were not used or held or acquired for the purposes of the branch or agency.

(3) Subject to section 45 (overseas life assurance companies), where in the year 1976-77 or any later year of assessment, a company not resident in the State receives any payment on which it bears income tax by deduction, and the payment forms part of, or is to be taken into account in computing, the company's income chargeable to corporation tax, the income tax thereon shall be set off against any corporation tax assessable on that income by an assessment made for the accounting period in which the payment falls to be taken into account for corporation tax; and accordingly in respect of that payment the company shall not be entitled to a repayment of income tax before the assessment for that accounting period is finally determined and it appears that a repayment is due.

(4) Without prejudice to the general application of income tax procedure to corporation tax, the provisions of Chapter II of Part IX of the Income Tax Act, 1967 (Special Provisions as to Non-residents and Temporary Residents), and section 209 in Chapter III of the said Part (liability of trustees, etc.) relating to the assessment and charge of income tax on persons not resident in the State, so far as they are applicable to tax chargeable on a company, shall apply with any necessary adaptations in relation to corporation tax chargeable on companies not resident in the State.

9 Basis of, and periods for, assessment.

9.—(1) Except as otherwise provided by this Act, corporation tax shall be assessed and charged for any accounting period of a company on the full amount of the profits arising in the period (whether or not received in or remitted to the State) without any other deduction than is authorised by this Act.

(2) An accounting period of a company shall begin for purposes of corporation tax whenever—

(a) the company, not then being within the charge to corporation tax, comes within it whether by the coming into force of any provision of this Act, or by the company becoming resident in the State or acquiring a source of income, or otherwise; or

(b) an accounting period of the company ends without the company then ceasing to be within the charge to corporation tax.

(3) An accounting period of a company shall end for purposes of corporation tax on the first occurrence of any of the following—

(a) the expiration of twelve months from the beginning of the accounting period;

(b) an accounting date of the company or, if there is a period for which the company does not make up accounts, the end of that period;

(c) the company beginning or ceasing to trade or to be, in respect of the trade or (if more than one) of all the trades carried on by it, within the charge to corporation tax;

(d) the company beginning or ceasing to be resident in the State;

(e) the company ceasing to be within the charge to corporation tax.

(4) For the purposes of this section a company resident in the State, if not otherwise within the charge to corporation tax, shall be treated as coming within the charge to corporation tax on the 6th day of April, 1976, or at the time when it commences to carry on business, whichever is the later.

(5) If a company carrying on more than one trade makes up accounts of any of them to different dates, and does not make up general accounts for the whole of the company's activities, subsection (3) (b) shall apply with reference to the accounting date of such one of the trades as the Revenue Commissioners may determine.

(6) If, on or after the 6th day of April, 1976, a chargeable gain or allowable loss accrues to a company at a time not otherwise within an accounting period of the company, an accounting period of the company shall then begin for the purposes of corporation tax, and the gain or loss shall accrue in that accounting period.

(7) Notwithstanding anything in the preceding subsections, where a company is wound up, an accounting period shall end and a new one begin with the commencement of the winding up, and thereafter an accounting period shall not end otherwise than by the expiration of twelve months from its beginning or by the completion of the winding up.

For this purpose a winding up is to be taken to commence on the passing by the company of a resolution for the winding up of the company, or on the presentation of a winding up petition if no such resolution has previously been passed and a winding up order is made on the petition, or on the doing of any other act for a like purpose in the case of a winding up otherwise than under the Companies Act, 1963.

(8) Where it appears to the inspector that the beginning or end of any accounting period of a company is uncertain, he may make an assessment on the company for such period, not exceeding twelve months, as appears to him appropriate, and that period shall be treated for all purposes as an accounting period of the company unless either the inspector on further facts coming to his knowledge sees fit to revise it or on an appeal against the assessment in respect of some other matter the company shows the true accounting periods; and if on an appeal against an assessment made by virtue of this subsection the company shows the true accounting periods the assessment appealed against shall, as regards the period to which it relates, have effect as an assessment or assessments for the true accounting periods, and there may be made such other assessments for any such periods or any of them as might have been made at the time when the assessment appealed against was made.

10 Allowance of charges on income.

10.—(1) In computing the corporation tax chargeable for any accounting period of a company any charges on income paid by the company in the accounting period, but not before the 6th day of April, 1976, so far as paid out of the company's profits brought into charge to corporation tax, shall be allowed as deductions against the total profits for the period as reduced by any other relief from tax other than group relief.

(2) Subject to the following subsections and to any other express exceptions, “charges on income” means for the purposes of corporation tax payments of any description mentioned in subsection (3), not being dividends or other distributions of the company, but no payment which is deductible in computing profits or any description of profits for purposes of corporation tax shall be treated as a charge on income.

(3) Subject to subsections (4) to (7), the payments referred to in subsection (2) are—

(a) any yearly interest, annuity or other annual payment and any such other payments as are mentioned in section 93 (taxation of rents under long leases and certain other payments) or section 433 (2) (yearly interest, etc., payable wholly out of taxed profits) of the Income Tax Act, 1967, and

(b) any other interest payable in the State on an advance from a bank carrying on a bona fide banking business in the State, or from a person who in the opinion of the Revenue Commissioners is bona fide carrying on business as a member of a stock exchange in the State or bona fide carrying on the business of a discount house in the State;

and for the purposes of this section any interest payable by a company as mentioned in paragraph (b) shall be treated as paid on its being debited to the company's account in the books of the person to whom it is payable.

(4) No such payment as is mentioned in subsection (3) (a) made by a company to a person not resident in the State shall be treated as a charge on income unless the company is resident in the State and either—

(a) the company deducts income tax from the payment in accordance with section 434 of the Income Tax Act, 1967 (interest, etc., not payable out of taxed profits), or the provisions of that section as applied by section 31 of the Finance Act, 1974, and accounts under section 151 (income tax on payments) for the tax so deducted; or