Corporation Tax Act , 1976

(a) a company which on the said date, or immediately after the chargeable company ceased to be a member of the group, was the principal company of the group, and

(b) a company which owned the asset on the said date, or when the chargeable company ceased to be a member of the group,

may at any time within two years from the time when the tax became payable, be assessed and charged (in the name of the chargeable company) to all or any part of that tax; and a company paying any amount of tax under this subsection shall be entitled to recover a sum of that amount from the chargeable company.

(6) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of this section may be made at any time within ten years from the time when the chargeable company ceased to be a member of the group, and where under this section the chargeable company is to be treated as having disposed of and reacquired, an asset, all such recomputations of liability in respect of other disposals, and all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section shall be carried out.

136 Exemption from charge under section 135 in the case of certain mergers.

136.—(1) Subject to the following provisions of this section, section 135 shall not apply in a case where—

(a) as part of a merger, a company (in this section referred to as “company A”) ceases to be a member of a group of companies (in this section referred to as “the A group”); and

(b) it is shown that the merger was carried out for bona fide commercial reasons and that the avoidance of liability to tax was not the main or one of the main purposes of the merger.

(2) In this section “merger” means an arrangement (which in this section includes a series of arrangements)—

(a) whereby one or more companies (in this section referred to as “the acquiring company” or, as the case may be, “the acquiring companies”) none of which is a member of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business which, before the arrangement took effect, was carried on by company A; and

(b) whereby one or more members of the A group acquires or acquire, otherwise than with a view to their disposal, one or more interests in the whole or part of the business or each of the businesses which, before the arrangement took effect, was carried on either by the acquiring company or acquiring companies or by a company at least 90 per cent. of the ordinary share capital of which was then beneficially owned by two or more of the acquiring companies; and

(c) in respect of which the conditions in subsection (4) are fulfilled.

(3) For the purposes of subsection (2), a member of a group of companies shall be treated as carrying on as one business the activities of that group.

(4) The conditions referred to in subsection (2) (c) are—

(a) that not less than 25 per cent. by value of each of the interests acquired as mentioned in paragraphs (a) and (b) of subsection (2) consists of a holding of ordinary share capital, and the remainder of the interest, or as the case may be of each of the interests, acquired as mentioned in the said paragraph (b) consists of a holding of share capital (of any description) or debentures or both; and

(b) that the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2) (a) is substantially the same as the value or, as the case may be, the aggregate value of the interest or interests acquired as mentioned in subsection (2) (b); and

(c) that the consideration for the acquisition of the interest or interests acquired by the acquiring company or acquiring companies as mentioned in subsection (2) (a), disregarding any part of that consideration which is small by comparison with the total, either consists of, or is applied in the acquisition of, or consists partly of and as to the balance is applied in the acquisition of, the interest or interests acquired by members of the A group as mentioned in subsection (2) (b);

and for the purposes of this subsection the value of an interest shall be determined as at the date of its acquisition.

(5) Notwithstanding the provisions of section 129 (1) (a), references in this section to a company include references to a company resident outside the State.

137 Shares in subsidiary member of a group.

137.—(1) This section has effect if a company (in this section called “the subsidiary”) ceases to be a member of a group of companies, and on an earlier occasion shares in the subsidiary were disposed of by another company (in this section called “the chargeable company”) which was then a member of that group in the course of an amalgamation or reconstruction in the group, but only if that earlier occasion fell—

(a) on or after the 27th day of November, 1975, and

(b) within the period of ten years ending with the date on which the subsidiary ceases to be a member of the group;

and references in this section to a company ceasing to be a member of a group of companies do not apply to cases where a company ceases to be a member of a group by being wound up or dissolved or in consequence of another member of the group being wound up or dissolved.

(2) The chargeable company shall be treated, for all the purposes of the Capital Gains Tax Act, 1975, as if immediately before the earlier occasion it had sold, and immediately reacquired, the said shares at market value at that time, and for the purposes of this subsection if the earlier occasion fell on or before the 5th day of April, 1976, it shall be deemed to have fallen on the 6th day of April, 1976.

(3) If, before the subsidiary ceases to be a member of the group, the chargeable company has ceased to exist, or a resolution has been passed, or an order made, for the winding up of the company, or any other act has been done for the like purpose, any corporation tax to which, if the chargeable company had continued in existence, it would have been chargeable in consequence of this section may be assessed and charged (in the name of the chargeable company) on the company which is, at the time when the subsidiary ceases to be a member of the group, the principal company of the group.

(4) If any of the corporation tax assessed on a company in consequence of this section, or in pursuance of subsection (3), is not paid within six months from the date when it becomes payable, then—

(a) a company which is on the said date, or was on the earlier occasion, the principal company of the group, and

(b) any company taking an interest in the subsidiary as part of the amalgamation or reconstruction in the group,

may at any time within two years from the time when the tax became payable, be assessed and charged (in the name of the chargeable company) to all or any part of that tax; and a company paying any amount of tax under this subsection shall be entitled to recover a sum of that amount from the chargeable company, or as the case may be from the company assessed under subsection (3).

(5) Notwithstanding any limitation on the time for making assessments, an assessment to corporation tax chargeable in consequence of this section may be made at any time within ten years from the time when the subsidiary ceased to be a member of the group and, in relation to any disposal of the property after the earlier occasion, there shall be made all such adjustments of tax, whether by way of assessment or by way of discharge or repayment of tax, as may be required in consequence of the provisions of this section.

(6) For the purposes of this section there is a disposal of shares in the course of an amalgamation or reconstruction in a group of companies if paragraph 4 or 5 of Schedule 2 to the Capital Gains Tax Act, 1975 (company amalgamations), applies to shares in a company so as to equate them with shares in or debentures of another company, and the companies are members of the same group, or become members of the same group as a result of the amalgamation or reconstruction.

(7) Where by virtue of paragraph 5 of the said Schedule 2 shares are to be treated as cancelled and replaced by a new issue, references in this section to a disposal of shares include references to the occasion of their being so treated.

138 Depreciatory transactions in a group.

138.—(1) This section has effect as respects a disposal of shares in, or securities of, a company (in this section referred to as an “ultimate disposal”) if the value of the shares or securities has been materially reduced by a depreciatory transaction effected on or after the 6th day of April, 1974; and for this purpose “depreciatory transaction” means—

(a) any disposal of assets at other than market value by one member of a group of companies to another, or

(b) any other transaction satisfying the conditions of subsection (2):

Provided that a transaction shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been brought into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

(2) The conditions referred to in subsection (1) (b) are—

(a) that the company, the shares in which, or securities of which, are the subject of the ultimate disposal, or any 75 per cent. subsidiary of that company, was a party to the transaction, and

(b) that the parties to the transaction were or included two or more companies which at the time of the transaction were members of the same group of companies.

(3) Without prejudice to the generality of subsection (1), the cancellation of any shares in or securities of one member of a group of companies under section 72 of the Companies Act, 1963, shall, to the extent that immediately before the cancellation those shares or securities were the property of another member of the group, be taken to be a transaction fulfilling the conditions in subsection (2).

(4) If the person making the ultimate disposal is, or has at any time been, a member of the group of companies referred to in subsection (1) or (2), any allowable loss accruing on the disposal shall be reduced to such extent as appears to the inspector, or on appeal the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the depreciatory transaction:

Provided that if the person making the ultimate disposal is not a member of the said group when he disposes of the shares or securities, no reduction of the loss shall be made by reference to a depreciatory transaction which took place when that person was not a member of the said group.

(5) The inspector or the Appeal Commissioners or the judge of the Circuit Court shall make the decision under subsection (4) on the footing that the allowable loss ought not to reflect any diminution in the value of the company's assets which was attributable to a depreciatory transaction, but allowance may be made for any other transaction on or after the 6th day of April, 1974, which has enhanced the value of the company's assets and depreciated the value of the assets of any other member of the group.

(6) If, under subsection (4), a reduction is made in an allowable loss, any chargeable gain accruing on a disposal of the shares or securities of any other company which was a party to the depreciatory transaction by reference to which the reduction was made, being a disposal not later than ten years after the depreciatory transaction, shall be reduced to such extent as appears to the inspector, or on appeal to the Appeal Commissioners, or on a rehearing by a judge of the Circuit Court, that judge, to be just and reasonable having regard to the effect of the depreciatory transaction on the value of those shares or securities at the time of their disposal:

Provided that the total amount of any one or more reductions in chargeable gains made by reference to a depreciatory transaction shall not exceed the amount of the reductions in allowable losses made by reference to that depreciatory transaction.

All such adjustments, whether by way of discharge or repayment of tax, or otherwise, as are required to give effect to the provisions of this subsection may be made at any time.

(7) For the purposes of this section—

“securities” includes any loan stock or similar security whether secured or unsecured;

references to the disposal of assets include references to any method by which one company which is a member of a group appropriates the goodwill of another member of the group;

a “group of companies” may consist of companies some or all of which are not resident in the State.

(8) References in this section to the disposal of shares or securities include references to the occasion of the making of a claim under section 12 (4) of the Capital Gains Tax Act, 1975, that the value of shares or securities has become negligible, and references to a person making a disposal shall be construed accordingly.

139 Dividend stripping.

139.—(1) The provisions of this section apply where one company (in this section referred to as “the first company”) has a holding in another company (in this section referred to as “the second company”) and the following conditions are fulfilled—

(a) that the holding amounts to, or is an ingredient in a holding amounting to, 10 per cent. of all holdings of the same class in the second company,

(b) that the first company is not a dealing company in relation to the holding,

(c) that a distribution is or has been made on or after the 6th day of April, 1974, to the first company in respect of the holding, and

(d) that the effect of the distribution is that the value of the holding is or has been materially reduced.

(2) Where this section applies in relation to a holding section 138 shall apply in relation to any disposal of any shares or securities comprised in the holding, whether the disposal is by the first company or by any other company to which the holding is transferred by a transfer to which section 130 applies, as if the distribution were a depreciatory transaction and, if the companies concerned are not members of a group of companies, as if they were:

Provided that the distribution shall not be treated as a depreciatory transaction to the extent that it consists of a payment which is required to be or has been brought into account, for the purposes of corporation tax on chargeable gains, in computing a chargeable gain or allowable loss accruing to the person making the ultimate disposal.

(3) This section shall be construed together with section 138.

(4) For the purposes of this section a company is “a dealing company” in relation to a holding if a profit on the sale of the holding would be taken into account in computing the company's trading profits.

(5) References in this section to a holding in a company refer to a holding of shares or securities by virtue of which the holder may receive distributions made by the company, but so that—

(a) a company's holdings of different classes in another company shall be treated as separate holdings, and

(b) holdings of shares or securities which differ in the entitlements or obligations they confer or impose shall be regarded as holdings of different classes.

(6) For the purposes of subsection (1)—

(a) all a company's holdings of the same class in another company are to be treated as ingredients constituting a single holding, and

(b) a company's holding of a particular class shall be treated as an ingredient in a holding amounting to 10 per cent. of all holdings of that class if the aggregate of that holding and other holdings of that class held by connected persons amounts to 10 per cent. of all holdings of that class,

and section 157 shall have effect in relation to paragraph (b) as if in subsection (7) of that section after the words “or exercise control of” in each place where they occur there were inserted the words “or to acquire a holding in”.

PART XIII Application and Adaptation of Enactments

140 Application and adaptation of Income Tax Acts and Capital Gains Tax Act, 1975.

140.—(1) Without prejudice to the general application to corporation tax of the provisions of the Income Tax Acts relating to the computation of income, Part I of the Second Schedule shall have effect for the purpose of applying to corporation tax or otherwise adapting the provisions of those Acts there mentioned.

(2) Without prejudice to the general application to corporation tax of the provisions of the Capital Gains Tax Act, 1975, relating to the computation of chargeable gains, Part II of the Second Schedule shall have effect for the purpose of applying to corporation tax or otherwise adapting the provisions of that Act there mentioned.

(3) The amendments in each Part of the Second Schedule are subject to the provisions of this Act and, in particular, to the provisions of the final paragraph of that Part.

PART XIV Administration

141 Particulars to be supplied by new companies, etc.

141.—(1) Every company which, on or after the 6th day of April, 1976, commences to carry on a trade, profession or business shall, within thirty days from the date of such commencement, deliver to the Revenue Commissioners a statement in writing containing the following particulars—

(a) the name of the company;

(b) the address of its registered office in the State or, in the case of a company which is not resident in the State, the address of its principal place of business in the State;

(c) the name of the secretary or, in the case of a company which is not resident in the State, the name and address of the agent, manager, factor or other representative of the company;

(d) the date of commencement of the trade, profession or business or, in the case of a company which is not resident in the State, the date of commencement of its trade or profession in the State;

(e) the nature of the trade, profession or business; and

(f) the date to which the first accounts relating to such trade, profession or business will be made up:

Provided that this subsection shall not apply to a company which is neither resident nor incorporated in the State unless it commences to carry on a trade or profession in the State.

(2) Where a company fails to deliver a statement which it is required to deliver under this section—

(a) the company shall be liable to a penalty of £500 and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(b) the secretary of the company shall be liable to a separate penalty of £100.

142 Notice of liability to corporation tax.

142.—(1) Every company which is chargeable to corporation tax for any accounting period and which has not made a return of its profits for that accounting period shall, not later than one year after the end of that accounting period, give notice to the inspector that it is so chargeable:

Provided that this subsection shall not impose a duty to give any notice before the 6th day of April, 1976.

(2) Where a company fails to give a notice which it is required to give under this section—

(a) the company shall be liable to a penalty of £500 and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(b) the secretary of the company shall be liable to a separate penalty of £100.

143 Return of profits.

143.—(1) A company may be required by a notice served on it by an inspector or other officer of the Revenue Commissioners to deliver to the officer within the time limited by the notice a return of the profits of the company computed in accordance with this Act—

(a) specifying the income taken into account in computing those profits, with the amount from each source,

(b) giving particulars of all disposals giving rise to chargeable gains or allowable losses under the provisions of the Capital Gains Tax Act, 1975, and this Act and particulars of those chargeable gains or allowable losses, and

(c) giving particulars of all charges on income to be deducted against those profits for the purpose of the assessment to corporation tax.

(2) A notice under this section may require a return of profits arising in any period during which the company was within the charge to corporation tax.

(3) Every return under this section shall include a declaration to the effect that the return is correct and complete.

(4) A return under this section which includes profits which are payments on which the company has borne income tax by deduction shall specify the amount of income tax so borne.

(5) A notice under this section may require the inclusion in the return of particulars of management expenses, capital allowances and balancing charges which have been taken into account in arriving at the profits included in the return.

(6) Paragraph 3 (3) (4) of Schedule 4 to the Capital Gains Tax Act, 1975 (power to demand information about the acquisition of assets), shall apply in relation to a notice under this section as they apply in relation to a notice under any of the provisions of the Income Tax Acts, as applied in relation to capital gains tax by the said paragraph 3.

(7) Section 174 of the Income Tax Act, 1967 (production of accounts and books), shall apply where a company is required to make, or makes, a return under this section relating to profits which consist of or comprise those arising from a trade as it applies where a person is required to make, or makes, a return for the purposes of income tax of the profits or gains arising to him from any trade.

(8) (a) If any company has been required by notice served under the foregoing provisions of this section to deliver a return and the company fails to comply with the notice—

(i) the company shall be liable to a penalty of £500 except in the case mentioned in paragraph (b) and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(ii) the secretary of the company shall be liable to a separate penalty of £100 except in the case mentioned in paragraph (b).

(b) Where any such failure as is mentioned in paragraph (a) continues after the expiration of one year beginning with the date on which the notice was served the first of the penalties mentioned in the said paragraph for which the company is liable shall be £1,000, and the secretary of the company shall be liable to a separate penalty of £200.

(9) Where a company fraudulently or negligently—

(a) delivers an incorrect return under the provisions of this section, or

(b) makes any incorrect return, statement or declaration in connection with any claim for any allowance, deduction or relief in respect of corporation tax, or

(c) submits to an inspector, the Revenue Commissioners or the Appeal Commissioners any incorrect accounts in connection with the ascertainment of the company's liability to corporation tax,

the company shall be liable to a penalty of—

(i) £500, or, in the case of fraud, £1,000, and

(ii) the amount, or, in the case of fraud, twice the amount, of the difference specified in subsection (10), and

the secretary of the company shall be liable to a separate penalty of £100, or, in the case of fraud, £200.

(10) The difference referred to in subsection (9) is the difference between—

(a) the amount of corporation tax payable by the said company for the accounting period or accounting periods comprising the period to which the return, statement, declaration or accounts relate, and

(b) the amount which would have been the amount so payable if the return, statement, declaration or accounts had been correct.

(11) The provisions of section 501 (3) of the Income Tax Act, 1967 (failure to correct an error not made fraudulently or negligently), shall apply for the purposes of this section as they apply for the purposes of the said section 501.

(12) (a) Section 191 of the Income Tax Act, 1967 (error or mistake), shall apply in relation to corporation tax as it applies in relation to income tax under Schedule D.

(b) Any return under this Act shall be in such form as the Revenue Commissioners prescribe.

(c) In this section “return” includes any statement, declaration or list.

144 Assessment of corporation tax.

144.—(1) Assessments to corporation tax shall be made by an inspector.

(2) Where a company on whose profits the tax is to be assessed is resident in the State the tax shall be assessed on the company, and where a company on whose profits the tax is to be assessed is not resident in the State the tax shall be assessed on the company in the name of any agent, manager, factor or other representative of the company.

(3) The inspector shall give notice to the company assessed, or, in the case of a company which is not resident in the State, to the agent, manager, factor or other representative of the company assessed, of every assessment made by him.

(4) If—

(a) a company makes default in the delivery of a statement in respect of corporation tax, or

(b) the inspector is not satisfied with a statement which has been delivered, or has received any information as to its insufficiency,

the inspector shall make an assessment on the company concerned in such sum as, according to the best of the inspector's judgment, ought to be charged on that company.

(5) (a) If an inspector discovers—

(i) that any profits which ought to have been assessed to corporation tax have not been assessed, or

(ii) that an assessment to corporation tax is or has become insufficient, or

(iii) that any relief which has been given is or has become excessive,

the inspector shall make an assessment in the amount, or the further amount, which ought in his opinion to be charged.

(b) Subject to any provision allowing a longer period in any class of case, no assessment to corporation tax shall be made more than ten years after the end of the accounting period to which it relates:

Provided that in a case in which any form of fraud or neglect has been committed by or on behalf of any company in connection with or in relation to corporation tax, an assessment may be made on that company at any time for any accounting period for which, by reason of the fraud or neglect, corporation tax would otherwise be lost to the Exchequer.

(c) An objection to the making of any assessment on the ground that the time limited for the making thereof has expired shall only be made on appeal from the assessment.

(d) In this subsection “neglect” means negligence or a failure to give any notice, to make any return, statement or declaration, or to produce or furnish any list, document or other information required by or under the enactments relating to corporation tax:

Provided that a company shall be deemed not to have failed to do anything required to be done within a limited time if it did it within such further time, if any, as the Revenue Commissioners or officer concerned may have allowed; and where a company had a reasonable excuse for not doing anything required to be done, it shall be deemed not to have failed to do it if it did it without unreasonable delay after the excuse had ceased.

145 Collection of corporation tax.

145.—(1) The Collector-General shall collect and levy the tax from time to time charged on all assessments to corporation tax of which particulars have been transmitted to him under section 187 (1) of the Income Tax Act, 1967, as applied for the purposes of corporation tax by section 147.

(2) All such powers as are exercisable with respect to the collecting and levying of sums of income tax under Schedule D of the Income Tax Act, 1967, of which particulars are transmitted under section 187 (1) of that Act shall extend with respect to sums of corporation tax of which particulars are transmitted under that section as applied by section 147.

(3) Section 550 of the Income Tax Act, 1967 (interest on overdue tax), shall apply for the purposes of corporation tax as it applies for the purposes of income tax subject to the inclusion in subsection (1) thereof of a reference to section 6 (4) (general scheme of corporation tax) of this Act for the reference to section 477 of the Income Tax Act, 1967 (time for payment of tax), and section 28 of the Finance Act, 1975 (interest on unpaid taxes), shall apply to interest which, under the said section 550 as applied by this section, is chargeable in respect of corporation tax.

(4) (a) In this subsection “neglect” has the same meaning as in section 144 (5) (d).

(b) Where, for any accounting period, an assessment is made for the purpose of recovering an undercharge to corporation tax which is attributable to the fraud or neglect of any person, the amount of tax undercharged shall carry interest at the rate of 15 per cent. for each month or part of a month from the date or dates on which the tax undercharged for that accounting period would have been payable, if it had been included in an assessment made on the expiration of six months from the end of that accounting period, to the date of payment of the tax undercharged.

(c) Subject to paragraph (e), section 550 (1) (2) of the Income Tax Act, 1967, shall not apply to tax carrying interest under this subsection.

(d) Subsections (3), (4) and (5) of section 550 of the Income Tax Act, 1967, shall apply to interest chargeable under this subsection as they apply to interest chargeable under the said section 550.

(e) Where an assessment of the kind referred to in paragraph (b) is made—

(i) the inspector concerned shall give notice to the person assessed that the tax charged by the assessment will carry interest under this subsection,

(ii) the person assessed may appeal against the assessment on the ground that interest should not be charged under this subsection, and the provisions of this Act relating to appeals against assessments shall apply and have effect in relation to the appeal as they apply in relation to those appeals with any necessary modifications, and

(iii) if, on the appeal, it is determined that the tax charged by the assessment should not carry interest under this subsection, section 550 (1) (2) of the Income Tax Act, 1967, shall apply to that tax as it applies to tax charged by an assessment to income tax.

(5) The priority attaching to assessed taxes under sections 98 and 285 of the Companies Act, 1963, shall apply to corporation tax.

146 Appeals.

146.—(1) The provisions of Part XXVI of the Income Tax Act, 1967 (Appeals), shall apply for the purposes of corporation tax as they apply for the purposes of income tax and accordingly, in those provisions, any reference to income tax shall be taken as including a reference to corporation tax and any reference to the Income Tax Act, 1967, shall be taken as including a reference to the Corporation Tax Acts.

(2) Where an Appeal Commissioner is interested in his own right or in the right of any other person in any matter under appeal, he shall not take part in, or be present at, the hearing or determination of the appeal.

147 Application of income tax administrative provisions to corporation tax.

147.—(1) The provisions of the Income Tax Acts specified in subsection (2) shall apply in relation to corporation tax as they apply in relation to income tax and accordingly in those provisions—

(a) any reference to income tax shall be taken as including a reference to corporation tax,

(b) any reference to the Income Tax Acts shall be taken as including a reference to the Corporation Tax Acts, and

(c) any reference to a year of assessment shall be taken as including a reference to an accounting period.

(2) The provisions of the Income Tax Acts referred to in subsection (1) are sections 164, 165, 166 (2), 187 (1) (3), 188 (1), 190, 212, 339, 491, 498, 505, 506, 507, 514, 515, 516, 518, 519, 521, 536, 537, 538, 539, 541, 542, 543, 547, 549 and 551 (1) of the Income Tax Act, 1967, section 6 of the Finance Act, 1968, section 73 of the Finance Act, 1974, and section 21 of the Finance Act, 1975.

(3) The provisions of the Income Tax Acts specified in subsection (4) shall apply in relation to the recovery of a penalty under the provisions of the Corporation Tax Acts as they apply in relation to the recovery of a penalty under the provisions of Part XXXV of the Income Tax Act, 1967.

(4) The provisions of the Income Tax Acts referred to in subsection (3) are sections 172 (5), 504, 508, 510, 511, 512 and 513 of the Income Tax Act, 1967.

(5) All Commissioners and other persons employed for any purpose in connection with the assessment or collection of corporation tax shall be subject to the same obligations as to secrecy with respect to corporation tax as those persons are subject to with respect to income tax, and any declaration made by any such person as to secrecy with respect to income tax shall be deemed to extend also to secrecy with respect to corporation tax.

148 Time for certain summary proceedings.

148.—Notwithstanding section 10 (4) of the Petty Sessions (Ireland) Act, 1851, summary proceedings under section 516 of the Income Tax Act, 1967 (false statements), as applied in relation to corporation tax or under section 63 (production of books and documents: export sales relief) may be instituted within three years from the date of the offence or incurring of the penalty (as the case may be).

149 Penalties for failure to furnish information and for incorrect information.

149.—(1) Where any person has been required by notice given under or for the purposes of section 27 (change in ownership of company: disallowance of trading losses), section 73 (Shannon relief: delivery of statements), section 123 (information as to arrangements for transferring relief) or Part X (Close Companies), to furnish any information or particulars and he fails to comply with the notice he shall be liable, subject to subsection (3), to a penalty of £100 and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £10 for each day on which the failure so continues.

(2) Where a person fraudulently or negligently furnishes any incorrect information or particulars of a kind mentioned in Part X, section 27, 73, 123 or 151, he shall be liable, subject to subsection (4), to a penalty of £100, or, in the case of fraud, £250.

(3) Where the person mentioned in subsection (1) is a company, it shall be liable to—

(a) a penalty of £500, and, if the failure continues after judgment has been given by the court before which proceedings for the penalty have been commenced, to a further penalty of £50 for each day on which the failure so continues, and

(b) the secretary of the company shall be liable to a separate penalty of £100.

(4) Where the person mentioned in subsection (2) is a company, it shall be liable to—

(a) a penalty of £500, or, in the case of fraud, £1,000, and

(b) the secretary of the company shall be liable to a separate penalty of £100, or, in the case of fraud, £200.

(5) The provisions of section 501 (3) of the Income Tax Act, 1967, shall apply for the purposes of this section as they apply for the purposes of the said section 501.

150 Postponement of payment of tax to be permitted in certain cases.

150.—(1) Where—

(a) for any accounting period the profits of a company consist of or include income from a trade of dealing in or developing land in the course of which the company disposes of the full interest acquired by it in any land, and

(b) in relation to that disposal the conditions specified in paragraphs (b) to (e) of section 23 (1) of the Finance (Miscellaneous Provisions) Act, 1968 (postponement of payment of tax to be permitted in certain cases), are satisfied, and

(c) at the time when any amount of corporation tax charged by an assessment for that accounting period would, but for this section, become due and payable (otherwise than by virtue of section 419 of the Income Tax Act, 1967 (agreement as to amount of tax not in dispute on an appeal against an assessment), as applied for the purposes of corporation tax)—

(i) the company retains the leasehold interest acquired by it from the person to whom the disposition is made, and

(ii) has not disposed, as regards the whole or any part of the land, of an interest derived from that leasehold interest,

a part of the said amount of corporation tax equal to nine-tenths of so much thereof as would not have been chargeable if no sum had fallen to be taken into account as mentioned in section 23 (1) (d) of the Finance (Miscellaneous Provisions) Act, 1968, shall be payable in nine equal instalments at yearly intervals the first of which is payable on the expiration of twelve months from the date on which, but for this section, the said amount of corporation tax would have been payable.

(2) Where, in a case in which the postponement of payment of any amount of corporation tax has been authorised by subsection (1)—

(a) the company ceases to retain the leasehold interest acquired by it,

(b) the company disposes, as regards the whole or any part of the land, of an interest derived from the said leasehold interest, or

(c) the company commences to be wound up,

the said amount of corporation tax, or, as the case may be, so much of it as has not already become due and payable, shall become due and payable forthwith.

151 Income tax on payments.

151.—(1) In this section “relevant payment” means—

(a) any payment made on or after the 6th day of April, 1976, from which income tax is deductible and to which the provisions of subsections (2) to (5) of section 434 of the Income Tax Act, 1967 (payments not payable out of taxed profits), apply, and

(b) any amount which under section 98 (loans to participators, etc.) is deemed to be an annual payment.

(2) This section shall have effect for the purpose of regulating the time and manner in which companies resident in the State—

(a) are to account for and pay income tax in respect of relevant payments, and

(b) are to be repaid income tax in respect of payments received by them on or after the 6th day of April, 1976.

(3) A company shall for each of its accounting periods make, in accordance with this section, a return to the Collector-General of the relevant payments made by it in that period and of the income tax for which the company is accountable in respect of those payments.

(4) A return for any period for which a return is required to be made under this section shall be made within six months from the end of that period.

(5) Income tax in respect of any payment required to be included in a return under this section shall be due at the time by which the return is to be made, and income tax so due shall be payable by the company without the making of any assessment; but income tax which has become due as aforesaid may be assessed on the company (whether or not it has been paid when the assessment is made) if that tax, or any part of it, is not paid on or before the due date.

(6) If it appears to the inspector that there is a relevant payment which ought to have been and has not been included in a return, or if the inspector is dissatisfied with any return, he may make an assessment on the company to the best of his judgment; and any income tax due under an assessment made by virtue of this subsection shall be treated for the purposes of interest on unpaid tax as having been payable at the time when it would have been payable if a correct return had been made.

(7) Where in any accounting period a company receives any payment on which it bears income tax by deduction the company may claim to have the income tax thereon set against any income tax which it is liable to pay under this section in respect of payments made by it in that period, and any such claim shall be included in the return made under subsection (4) for the accounting period in question and (where necessary) income tax paid by the company under this section for that accounting period and before the claim is allowed shall be repaid accordingly.

(8) (a) Where a claim has been made under subsection (7) no proceedings for collecting tax which would fall to be discharged if the claim were allowed shall be instituted pending the final determination of the claim, but this subsection shall not affect the date when the tax is due and when the claim is finally determined any tax underpaid in consequence of this subsection shall be paid.

(b) Where proceedings are instituted for collecting tax assessed, or interest on tax assessed, under any provision of subsection (5) or (6), effect shall not be given to any claim made after the institution of the proceedings so as to affect or delay the collection or recovery of the tax charged by the assessment or of interest thereon.

(c) References in this subsection to proceedings for the collection of tax include references to proceedings by way of distraint for tax.

(9) Income tax set against other tax under subsection (7) shall be treated as paid or repaid, as the case may be, and the same tax shall not be taken into account both under this subsection and under section 3 (2) (income tax on payments made or received by a company resident in the State).

(10) Where a company makes a relevant payment on a date which does not fall within an accounting period the company shall make a return of that payment within six months from that date, and the income tax for which the company is accountable in respect of that payment shall be due at the time by which the return is to be made.

(11) (a) All the provisions of the Income Tax Acts as to the time within which an assessment may be made, so far as they refer or relate to the year of assessment for which an assessment is made, or the year to which an assessment relates, shall apply in relation to any assessment under this section notwithstanding that, under this section, the assessment may be said to relate to a period which is not a year of assessment, and the provisions of section 186 of the Income Tax Act, 1967 (additional assessments), as to the circumstances in which an assessment may be made at any time shall apply accordingly on the footing that any such assessment relates to the year of assessment in which the period ends.

(b) Income tax assessed on a company under this section shall, notwithstanding the provisions of section 477 of the Income Tax Act, 1967, be due within one month after the issue of the notice of assessment (unless due earlier under subsection (5) or (10)) subject to any appeal against the assessment, but no such appeal shall affect the date when tax is due under subsection (5) or (10).

(c) On the determination of an appeal against an assessment under this section any tax overpaid shall be repaid.

(d) Any tax assessable under any one or more of the provisions of this section may be included in one assessment if the tax so included is all due on the same date.

(12) Nothing in the foregoing provisions of this section shall be taken to prejudice any powers conferred by the Income Tax Acts for the recovery of income tax by means of an assessment or otherwise; and any assessment in respect of tax payable under subsection (10) shall be treated for the purposes of the provisions mentioned in subsection (11) (a) as relating to the year of assessment in which the payment is made.

(13) (a) The Revenue Commissioners may, by regulations made for the purposes mentioned in subsection (2), modify, supplement or replace any of the provisions of this section; and references in this Act and in any other enactment to this section shall be construed as including references to any such regulations; and without prejudice to the generality of the foregoing, the regulations may in relation to income tax charged by this section modify any provision of the Income Tax Acts relating to returns, assessments, claims or appeals or may apply any such provision with or without modification.

(b) Regulations under this subsection may—

(i) make different provision for different descriptions of companies, and for different circumstances, and may authorise the Revenue Commissioners, where in their opinion there are special circumstances justifying it, to make special arrangements as respects income tax for which a company is liable to account or the repayment of income tax borne by a company;

(ii) include such transitional and other supplemental provisions as appear to the Revenue Commissioners to be expedient or necessary.

(c) Every regulation made under this subsection shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next twenty-one days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

(14) Section 434 of the Income Tax Act, 1967, is hereby amended by the insertion of the following subsection after subsection (5)—

“(5A) Subsections (2), (3) and (5) have effect subject to the provisions of section 151 of the Corporation Tax Act, 1976, with respect to the time and manner in which companies resident in the State are to account for and pay income tax in respect of

(i) payments from which tax is deductible, and

(ii) any amount which is deemed to be an annual payment.”.

152 Provisions as to tax under section 151.

152.—(1) All the provisions of the Income Tax Acts relating to—

(a) persons who are to be chargeable with income tax;

(b) income tax assessments;

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

(d) the collection and recovery of income tax,

shall, so far as they are applicable, apply to the charge, assessment, collection and recovery of income tax under section 151.

(2) (a) Any tax payable in accordance with section 151 without the making of an assessment shall carry interest at the rate of 1.5 per cent. for each month or part of a month from the date when the tax becomes due and payable until payment.

(b) The provisions of section 550 (3) (4) (5) of the Income Tax Act, 1967, shall apply in relation to interest payable under this subsection as they apply in relation to interest payable under the said section 550.

(3) In its application to any tax charged by any assessment to income tax in accordance with section 151, section 550 of the Income Tax Act, 1967, shall have effect with the omission of the proviso to subsection (1) and subsections (2) and (2A).

153 Information.

153.—The inspector may, for any purpose in connection with the assessment and collection of corporation tax, make use of, or produce in evidence, any returns, correspondence, schedules, accounts, statements or other documents or information to which he or the Revenue Commissioners has had or have had or may have lawful access for the purposes of the Acts relating to any tax or duty under the care and management of the Revenue Commissioners.

154 Meaning of “secretary”.

154.—In this Part “secretary” includes such persons as are mentioned in section 207 (2) of the Income Tax Act, 1967, and, in the case of a company which is not resident in the State, the agent, manager, factor or other representative of the company.

PART XV Interpretation and Supplemental

155 Interpretation.

155.—(1) In this Act and in any Act passed after this Act “the Corporation Tax Acts”, except in so far as the context otherwise requires, means this Act (including provisions relating to income tax), together with the Income Tax Acts so far as those Acts apply for purposes of corporation tax and any other enactments relating to corporation tax.

(2) In this Act and in any Act passed after this Act “the Tax Acts”, except in so far as the context otherwise requires, means the Income Tax Acts (as defined in section 3 of the Income Tax Act, 1967) and the Corporation Tax Acts.

(3) Except in so far as the context otherwise requires, in this Act, and in any enactment passed after this Act which by any express provision is to be construed as one with the Tax Acts, “tax”, where neither income tax nor corporation tax is specified, means either of those taxes.

(4) Subsection (3) is without prejudice to the provisions of section 11 which apply income tax law for certain purposes of corporation tax, and accordingly the employment of “income tax” rather than “tax” in any provision of the Income Tax Acts is not a conclusive indication that that provision is not applied to corporation tax by the said section 11.

(5) For the purposes of the Corporation Tax Acts, except in so far as the context otherwise requires—

“accounting date” means the date to which a company makes up its accounts and “period of account” means the period for which it does so;

“allowable loss” does not include, for the purposes of corporation tax in respect of chargeable gains, a loss accruing to a company in such circumstances that if a gain accrued the company would be exempt from corporation tax in respect of it;

“branch or agency” means any factorship, agency, receivership, branch or management;

“chargeable gains” has the meaning given by section 1 (5) (c);

“charges on income” has the meaning given by section 10 (2);

“close company” has the meaning given by sections 94 and 95;

“company” has the meaning given by section 1 (5) (a);

“distribution” has the meaning given by Part IX with sections 96 and 97;

“the financial year 1974” has the meaning given by section 1 (5) (b);

“the financial year” followed by a reference to the year 1975 or any later year means the year beginning on the 1st day of January of such year;

“franked investment income” and “franked payment” shall be construed in accordance with section 24;

“group relief” has the meaning given by section 107;

“interest” means both annual or yearly interest and interest other than annual or yearly interest;

“ordinary share capital”, in relation to a company, means all the issued share capital (by whatever name called) of the company, other than capital the holders whereof have a right to a dividend at a fixed rate, but have no other right to share in the profits of the company;

“preference dividend” means a dividend payable on a preferred share or preferred stock at a fixed rate per cent. or, where a dividend is payable on a preferred share or preferred stock partly at a fixed rate per cent. and partly at a variable rate, such part of that dividend as is payable at a fixed rate per cent.;

“standard rate per cent.” for a year of assessment means 35 where the standard rate for that year is 35 per cent. and similarly as regards any reference to the standard rate per cent. for a year of assessment for which the standard rate is other than 35 per cent.;

“tax credit” means a credit under section 88;

a source of income is “within the charge to” corporation tax or income tax if that tax is chargeable on the income arising from it, or would be so chargeable if there were any such income, and references to a person, or to income, being within the charge to tax, shall be similarly construed.

(6) Any reference in this Act to any other enactment shall, unless the context otherwise requires, be construed as a reference to that enactment as amended or extended by any other enactment, including this Act.

(7) In the Corporation Tax Acts—

(a) a reference to a Part, section or schedule is to a Part or section of, or schedule to, the Act in which the reference occurs, and

(b) a reference to a subsection, paragraph or subparagraph is to the subsection, paragraph or subparagraph of the provision (including a schedule) in which the reference occurs,

unless it is indicated that reference to some other enactment or provision is intended.

(8) In the Corporation Tax Acts, words descriptive of any enactment are intended for convenience of reference only and shall not be used as an aid to the construction of the enactment to which they refer.

(9) References in the Corporation Tax Acts to distributions or 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.

(10) References in the Corporation Tax Acts to an amount of profits on which corporation tax falls finally to be borne are references to the amount of those profits after making all deductions and giving all reliefs that for the purposes of corporation tax are made or given from or against those profits, including deductions and reliefs which under any provision are treated as reducing them for those purposes.

(11) Except as otherwise provided by the Corporation Tax Acts and except in so far as the context otherwise requires, words and expressions used in the Income Tax Acts have the same meaning in the Corporation Tax Acts as in those Acts; but no provision of the Corporation Tax Acts as to the interpretation of any word or expression, other than a provision expressed to extend to the use of that word or expression in the Income Tax Acts, shall be taken to affect its meaning in those Acts as they apply for the purposes of corporation tax.

(12) For the purposes of the Corporation Tax Acts dividends shall, except as otherwise provided, be treated as paid on the date when they become due and payable.

(13) Except as otherwise provided by the Corporation Tax Acts, any apportionment to different periods which falls to be made under the Corporation Tax Acts shall be made on a time basis according to the respective lengths of those periods.

156 Subsidiaries.

156.—(1) For the purposes of the Corporation Tax Acts a company shall be deemed to be—

(a) a “51 per cent. subsidiary” of another company if and so long as more than 50 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

(b) a “75 per cent. subsidiary” of another company if and so long as not less than 75 per cent. of its ordinary share capital is owned directly or indirectly by that other company,

(c) a “90 per cent. subsidiary” of another company if and so long as not less than 90 per cent. of its ordinary share capital is directly owned by that other company.

(2) In subsection (1) (a) (b) “owned directly or indirectly” by a company means owned, whether directly or through another company or other companies or partly directly and partly through another company or other companies.

(3) In this section references to ownership shall be construed as references to beneficial ownership.

(4) For the purposes of this section the amount of ordinary share capital of one company owned by a second company through another company or other companies, or partly directly and partly through another company or other companies, shall be determined in accordance with the following provisions of this section.

(5) Where, in the case of a number of companies, the first directly owns ordinary share capital of the second and the second directly owns ordinary share capital of the third, then, for the purposes of this section, the first shall be deemed to own ordinary share capital of the third through the second, and, if the third directly owns ordinary share capital of a fourth, the first shall be deemed to own ordinary share capital of the fourth through the second and third, and the second shall be deemed to own ordinary share capital of the fourth through the third, and so on.

(6) In this section—

(a) any number of companies of which the first directly owns ordinary share capital of the next and the next directly owns ordinary share capital of the next but one and so on, and, if they are more than three, any three or more of them, are referred to as “a series”;

(b) in any series—

(i) that company which owns ordinary share capital of another through the remainder is referred to as “the first owner”;

(ii) that other company the ordinary share capital of which is so owned is referred to as “the last owned company”;

(iii) the remainder, if one only, is referred to as an “intermediary” and, if more than one, are referred to as “a chain of intermediaries”;

(c) a company in a series which directly owns ordinary share capital of another company in the series is referred to as an “owner”;

(d) any two companies in a series of which one owns ordinary share capital of the other directly, and not through one or more of the other companies in the series, are referred to as being directly related to one another.

(7) Where every owner in a series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own through the intermediary or chain of intermediaries the whole of the ordinary share capital of the last owned company.

(8) Where one of the owners in a series owns a fraction of the ordinary share capital of the company to which it is directly related, and every other owner in the series owns the whole of the ordinary share capital of the company to which it is directly related, the first owner shall be deemed to own that fraction of the ordinary share capital of the last owned company through the intermediary or chain of intermediaries.

(9) Where—

(a) each of two or more of the owners in a series owns a fraction, and every other owner in the series owns the whole, of the ordinary share capital of the company to which it is directly related; or

(b) every owner in a series owns a fraction of the ordinary share capital of the company to which it is directly related;

the first owner shall be deemed to own through the intermediary or chain of intermediaries such fraction of the ordinary share capital of the last owned company as results from the multiplication of those fractions.

(10) Where the first owner in any series owns a fraction of the ordinary share capital of the last owned company in that series through the intermediary or chain of intermediaries in that series, and also owns another fraction or other fractions of the ordinary share capital of the last owned company, either—

(a) directly, or

(b) through an intermediary or intermediaries which is not a member or are not members of that series, or

(c) through a chain or chains of intermediaries of which one or some or all are not members of that series, or

(d) in a case where the series consists of more than three companies, through an intermediary or intermediaries which is a member or are members of the series, or through a chain or chains of intermediaries consisting of some but not all of the companies of which the chain of intermediaries in the series consists,

then, for the purpose of ascertaining the amount of the ordinary share capital of the last owned company owned by the first owner, all those fractions shall be aggregated and the first owner shall be deemed to own the sum of those fractions.

157 Connected persons.

157.—(1) For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, any question whether a person is connected with another shall be determined in accordance with the following provisions of this section (any provision that one person is connected with another being taken to mean that they are connected with one another).

(2) A person is connected with an individual if that person is the individual's husband or wife, or is a relative, or the husband or wife of a relative, of the individual or of the individual's husband or wife.

(3) A person, in his capacity as trustee of a settlement, is connected with any individual who in relation to the settlement is a settlor, with any person who is connected with such an individual and with a company which, in accordance with subsection (10), is deemed to be connected with that settlement (“settlement” and “settlor” having for the purposes of this subsection the meanings assigned to them by subsection (9)).

(4) Except in relation to acquisitions or disposals of partnership assets pursuant to bona fide commercial arrangements, a person is connected with any person with whom he is in partnership, and with the husband or wife or a relative of any individual with whom he is in partnership.

(5) A company is connected with another company—

(a) if the same person has control of both, or a person has control of one and persons connected with him, or he and persons connected with him, have control of the other, or

(b) if a group of two or more persons has control of each company, and the groups either consist of the same persons or could be regarded as consisting of the same persons by treating (in one or more cases) a member of either group as replaced by a person with whom he is connected.

(6) A company is connected with another person if that person has control of it or if that person and persons connected with him together have control of it.

(7) Any two or more persons acting together to secure or exercise control of a company shall be treated in relation to that company as connected with one another and with any person acting on the directions of any of them to secure or exercise control of the company.

(8) In this section—

“control” shall be construed in accordance with section 102 (meaning of “associated company” and “control”),

“relative” means brother, sister, ancestor or lineal descendant.

(9) In this section, “settlement” includes any disposition, trust, covenant, agreement or arrangement, and “settlor”, in relation to a settlement, means any person by whom the settlement was made; and a person shall be deemed for the purposes of this section to have made a settlement if he has made or entered into the settlement directly or indirectly and in particular (but without prejudice to the generality of the preceding words) if he has provided or undertaken to provide funds directly or indirectly for the purpose of the settlement, or has made with any other person a reciprocal arrangement for that other person to make or enter into the settlement.

(10) For the purposes of this section, a company shall be deemed to be connected with a settlement in any accounting period if it is at any time in the period a close company (or only not a close company because it is not resident in the State) and the participators then include the trustees of or a beneficiary under the settlement.

158 Meaning of “control”.

158.—For the purposes of, and subject to, the provisions of the Corporation Tax Acts which apply this section, “control”, in relation to a company, means the power of a person to secure, by means of the holding of shares or the possession of voting power in or in relation to that or any other company, or by virtue of any powers conferred by the articles of association or other document regulating that or any other company, that the affairs of the first-mentioned company are conducted in accordance with the wishes of that person and, in relation to a partnership, means the right to a share of more than one-half of the assets, or of more than one-half of the income, of the partnership.

159 Chargeable gains accruing to non-resident companies.

159.—If any tax payable by any company by virtue of section 36 (2) of the Capital Gains Tax Act, 1975 (under which shareholders in a non-resident company may be taxed in respect of a chargeable gain accruing to the company), is paid by the company to which the chargeable gain accrues, or in a case under subsection (8) of the said section is paid by any such other company, the amount so paid shall not for the purposes of corporation tax be regarded as a payment to the company by which the tax was originally payable.

160 Individuals resident abroad: tax credit.

160.—An individual who, having made a claim in that behalf, is entitled to relief under Part VI of the Income Tax Act, 1967, by virtue of section 153 (2) of that Act (personal reliefs for certain non-residents) in respect of any year of assessment shall be entitled to a tax credit in respect of any distribution received by him in that year to the same extent as if he were resident in the State and section 67 (distributions to non-resident individuals out of profits from exports) and section 83 (4) (Schedule F) shall not have effect in relation to such an individual.

161 Rectification of excessive set-off etc. of tax credit.

161.—(1) If an inspector discovers that any set-off or payment of tax credit ought not to have been made, or is or has become excessive, the inspector may make any such assessments as may in his judgment be required for recovering any tax that ought to have been paid or any payment of tax credit that ought not to have been made and generally for securing that the resulting liabilities to tax of the persons concerned are what they would have been if only such set-offs or payments had been made as ought to have been made.

(2) Part XIV (Administration) shall apply to any assessment under this section for recovering a payment of tax credit as if it were an assessment to income tax for the year of assessment, or, in the case of a company, corporation tax for the accounting period, in respect of which the payment was claimed and as if that payment represented a loss of tax to the Exchequer; and any sum charged by any such assessment shall, subject to any appeal against the assessment, be due within fourteen days after the issue of the notice of assessment.

162 Surcharge on undistributed income of service companies.

162.—(1) Subject to subsection (2), in this section “service company” means—

(a) a close company whose business consists of or includes the carrying on of a profession or the provision of professional services,

(b) a close company having or exercising an office or employment, or

(c) a close company whose business consists of or includes the provision of services or facilities of whatsoever nature to or for—

(i) a company within either of the categories referred to in paragraphs (a) and (b),

(ii) an individual who carries on a profession,

(iii) a partnership which carries on a profession,

(iv) a person who has or exercises an office or employment, or

(v) a person or partnership connected with any person or partnership referred to in subparagraphs (i) to (iv):

Provided that the provision by a close company of services or facilities to or for a person or partnership not connected with the company shall be disregarded for the purposes of this paragraph.

(2) Where the principal part of a company's income which is chargeable to corporation tax under Cases I and II of Schedule D and Schedule E is not derived from—

(a) carrying on a profession,

(b) providing professional services,

(c) having or exercising an office or employment,

(d) providing services or facilities (other than services or facilities referred to in the proviso to subsection (1) (c)) to or for any person or partnership referred to in subsection (1) (c) (i) to (v), or

(e) any two or more of the activities specified in paragraphs (a) to (d),

the company shall be deemed not to be a service company.

(3) For the purposes of this section—

(a) a partnership shall be treated as connected with a company or individual (and a company or individual shall be treated as connected with a partnership) if any one of the partners in the partnership is connected with the company or individual,

(b) a partnership shall be treated as connected with another partnership if any one of the partners in the partnership is connected with any one of the partners in the other partnership.

(4) Where for an accounting period of a service company, the aggregate of—

(a) four-fifths of the distributable income, and

(b) one-fifth of the aggregate of the distributable investment income and the distributable estate income

exceeds the distributions of the company for the accounting period, there shall be charged on the company for the accounting period an additional duty of corporation tax (in this section referred to as a surcharge) amounting to 20 per cent. of the excess:

Provided that—

(i) a surcharge shall not be made on the company where the excess is equal to or less than the smaller of the following amounts—

(I) £500, or, if the accounting period is less than twelve months, £500 proportionately reduced, and

(II) where the company has one or more associated companies, £500 divided by one plus the number of those associated companies, or, if the accounting period is less than twelve months, £500 proportionately reduced divided by one plus the number of those associated companies;

(ii) where the excess is greater than the smaller amount on which by virtue of paragraph (i) a surcharge would not be made, the amount of the surcharge shall not be greater than a sum equal to four-fifths of the amount by which the excess is greater than that smaller amount.

(5) The provisions of section 101 (1) shall not apply in relation to a service company but the provisions of section 101 (2) (3) (4) (5) (6) shall apply in relation to a surcharge made under this section as they apply in relation to a surcharge made under the said section 101 with the substitution in section 101 (2) of a reference to subsection (4) of this section for the reference to subsection (1) of that section.

(6) (a) The provisions of section 100 (1) (2) (6) (7) (meaning of distributable income, etc.) shall apply for the purposes of this section as they apply for the purposes of the said section 100 or section 101 as the case may be.

(b) For the purposes of this section—

(i) the income of a company for an accounting period is its income computed for that period as defined in section 100 (3);

(ii) distributable income, distributable investment income and distributable estate income of a company for an accounting period have the meanings assigned to them by section 100 (4) (5) with the substitution for the reference to a trading company in each place where it occurs in section 100 (5) of a reference to a service company.

(7) The provisions of section 157 shall apply for the purposes of this section.

163 Relief to certain companies liable to foreign tax.

163.—(1) In this section—

“accounting period” includes a part of an accounting period;

“external tax” means a tax which is chargeable and payable under the law of the territory in which the paying company is resident, being a territory to which this section applies, and which corresponds to Irish corporation tax or income tax or both of those taxes:

Provided that a tax which is payable under the law of a province, state or other part of a country, or which is levied by or on behalf of a municipality or other local body shall, for the purposes of this subsection, be deemed not to correspond to those taxes.

(2) This section applies to every territory other than—

(a) Northern Ireland and Great Britain,

(b) the United States of America, and

(c) a territory with the Government of which arrangements are for the time being in force by virtue of section 361 of the Income Tax Act, 1967 (agreements for relief from double taxation of income).

(3) Where a company (in this section referred to as the investing company) has paid, by deduction or otherwise, or is liable to pay, by reference to any part of its income arising in a territory to which this section applies, tax for any accounting period and it is shown to the satisfaction of the Revenue Commissioners—

(a) that the said part of the investing company's income consists of a dividend, or interest, paid to it by a company resident in the territory (in this section referred to as the paying company) not less than one-half of the voting power in which is controlled, directly or indirectly, by the investing company,

(b) that the said dividend, or interest, arose from the investment in the paying company by the investing company, whether by way of loan or otherwise, of a sum or sums representing—

(i) profits the Irish tax referable to which has been reduced to nil under Chapter IV of Part XXV of the Income Tax Act, 1967 (Profits from Export of Certain Goods), or under Part III of the Finance (Miscellaneous Provisions) Act, 1956 (Profits from Exports), or under Part IV of this Act (Profits from Exports), or

(ii) such proportion of profits the Irish tax referable to which has been reduced otherwise than to nil under the said provisions as is equal to the proportion by which the said Irish tax has been so reduced, or

(iii) profits arising from exempted trading operations which by virtue of Chapter I of Part XXV of the Income Tax Act, 1967 (Profits from Trading within Shannon Airport), or Parts I and II of the Finance (Miscellaneous Provisions) Act, 1958 (Trading within Shannon Airport), or Part V of this Act (Trading within Shannon Airport) have not, in relation to the company by which such operations are carried on, been taken into account for any purpose of the Income Tax Acts or for any purpose of Part V of the Finance Act, 1920 (Corporation Profits Tax), and the enactments amending or extending the said Part, or for any purpose of this Act, and

(c) that the investing company has paid external tax in the said territory in respect of the said part of its income,

the Revenue Commissioners may grant to the investing company in respect of the said accounting period such relief as is just with a view to affording relief in respect of the double taxation of the said part of the investing company's income, but not exceeding whichever of the following is the less, that is to say, one-half of the total of the corporation tax that would, but for this section, be payable by the investing company in respect of the said part of its income or the amount of the external tax paid or payable in the said territory in respect of the said part of its income after deduction of any relief to which the company may be entitled in that territory.

(4) (a) External tax paid by the paying company in respect of its profits shall be taken into account in considering whether any, and if so, what relief ought to be allowed in respect of a dividend paid by the paying company to the investing company, and for the purposes of this section, other than this subsection, such tax, or the appropriate part thereof, shall be regarded as external tax paid by the investing company.

(b) The provisions of paragraph 9 of Schedule 10 to the Income Tax Act, 1967 (relief in respect of foreign tax), shall apply for the purpose of ascertaining the amount of the external tax paid by the paying company which is to be taken into account in relation to any dividend paid by the paying company to the investing company as they apply to the computation of foreign tax to be taken into account for the purposes of the said paragraph 9.

(5) (a) Nothing in this section shall authorise the granting of relief under this section to any company in respect of any accounting period to such an extent as would reduce the aggregate amount (computed after deduction of any relief to which the company may be entitled in the said territory) of the corporation tax and external tax payable by such company in respect of any part of its income of the kind described in subsection (3) (a) arising in a territory to which this section applies below the amount of corporation tax which would be payable by the company in respect of the said part of its income if that part of its income had arisen in the State and had been liable in the hands of the investing company to corporation tax.

(b) In computing for the purposes of paragraph (a) the amount of corporation tax which would be so payable by the company in respect of the said part of its income if that part had arisen in the State—

(i) no deduction for external tax shall be made from the said part of its income, and

(ii) where pursuant to subsection (4) external tax paid by the paying company is regarded as external tax paid by the investing company, the said part of the investing company's income shall be treated as increased by the amount of the external tax which is so regarded.

(6) Relief under this section shall be given as a credit against corporation tax chargeable by reference to the part of the investing company's income referred to in subsection (3) (a).

(7) (a) Any claim for relief under this section shall be made in writing to the inspector not later than six years from the end of the accounting period to which it relates.

(b) An appeal to the Appeal Commissioners shall lie on any question arising under this section in like manner as an appeal would lie against an assessment to corporation tax, and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.

164 Income tax and corporation profits tax repeals.

164.—Each enactment mentioned in the Third Schedule is hereby repealed to the extent specified in column (3) of that Schedule, subject to the provisions of this Act and, in particular, to the provision made at the end of each Part of that Schedule.

165 Section 38 of Finance Act, 1924, not to apply to corporation tax.

165.—Section 38 of the Finance Act, 1924 (recovery of moneys due), shall not have effect in relation to corporation tax.

166 Amendments and repeals concerning double taxation relief.

166.—(1) Each enactment mentioned in column (2) of Part I of the Fourth Schedule shall be amended as specified in column (3) of that Schedule and shall, as so amended, have effect in relation to corporation tax.

(2) Each enactment mentioned in Part II of the Fourth Schedule is hereby repealed to the extent specified in column (3) of that Schedule.

(3) The amendments and repeals in each Part of the Fourth Schedule are subject to the provisions of this Act and, in particular, to the provision made at the end of that Part.

167 Computation of payable tax credits where double taxation relief is allowed.

167.—(1) In this section—

“the company” means a company making a distribution;

“distribution” means a distribution in respect of which the recipient is entitled to a tax credit under section 88;

“distributable income” has the meaning given by section 64 (4) (distributions: export sales relief);

“double taxation relief” means any credit for tax payable in any territory outside the State which is allowable against Irish corporation tax by virtue of any international agreement having the force of law, including any such credit which under section 363 of the Income Tax Act, 1967 (treatment of dividends for double taxation relief in certain cases), or this section has been taken into account in relation to any distribution receivable by the company;

“foreign tax” means tax payable in any territory outside the State and in respect of which double taxation relief is allowable;

“foreign income” means income in respect of which foreign tax is payable;

“the reduced Irish tax credit” means the sum calculated under subsection (3).

(2) (a) For the purposes of subsection (3) the amount of relevant tax in respect of any income is an amount determined by the formula

100
(A B) __
100 C

where—

A is the amount of corporation tax which is chargeable in respect of the income,

B is an amount equal to income tax at the standard rate on the amount of the income, such standard rate being the rate for the year of assessment in which the appropriate accounting period ends, and

C is the standard rate per cent. for the year of assessment in which the appropriate accounting period ends.

(b) For the purposes of paragraph (a) the appropriate accounting period means the accounting period for which corporation tax is chargeable in respect of the income.

(c) Notwithstanding paragraph (a) the amount of relevant tax in respect of any amount of franked investment income which by virtue of subsection (4) is deemed to be foreign income shall be taken to be nil.

(3) Where a distribution (being a distribution which is made, or by virtue of subsection (6) is deemed to have been made, for an accounting period) is made wholly or partly out of foreign income, and the foreign tax paid in respect of the income exceeds the amount of relevant tax in respect of that income, any payment of the tax credit in respect of the distribution shall be made as if the said tax credit were a sum calculated by deducting from the amount of the tax credit which apart from this section would apply in respect of the distribution—

(a) where the distribution is equal in amount to the whole of the distributable income—an amount equal to the excess of the foreign tax over the relevant tax in respect of the foreign income, and

(b) where the distribution is less in amount than the whole of the distributable income—an amount which bears to the deduction which would be made if the distribution were equal in amount to the whole of the distributable income the same proportion as the distribution bears to the whole of the distributable income.

(4) Where a distribution is received by the company and the amount of any payment of the tax credit to the company in respect of that distribution would, if a proper claim in that behalf were made, be determined in accordance with this section, then for the purposes of subsection (3)—

(a) the amount of franked investment income which the distribution represents shall be deemed to be foreign income of the accounting period in which the distribution is received, and

(b) the amount by which the tax credit in respect of the distribution exceeds the tax credit which would, if a proper claim in that behalf were made, be payable to the company shall be deemed to be foreign tax paid by the company in respect of that income.

(5) (a) Where, for an accounting period, the company has paid, or, under subsection (4), is deemed for the purposes of subsection (3) to have paid, foreign tax in respect of income from more than one source, the deduction referred to in subsection (3) shall be computed separately in respect of income from each source and the separate amounts as so computed shall be aggregated for the purpose of computing the total amount of the deduction which should be made.

(b) For the purposes of this subsection—

(i) the amount of franked investment income which is represented by each distribution which is received by the company shall be deemed to be income from a separate source, and

(ii) where a company has paid foreign tax in respect of income (not being franked investment income which is deemed under subsection (4) to be foreign income) arising in two or more territories outside the State, the income arising in each such territory shall be deemed to be income from a separate source.

(6) The provisions of subsections (3), (5) and (6) of section 64 (distributions: tax credit and export sales relief) shall apply for the purposes of this section as they apply for the purposes of that section.

(7) Where the income out of which a distribution is made, or is deemed by virtue of subsection (6) to have been made, includes income the income tax on which was reduced by the allowance of double taxation relief or includes dividends to which the provisions of section 363 (2) (a) of the Income Tax Act, 1967, applied, the tax credit in respect of that distribution shall for the purposes of payment thereof be subject to such adjustment as may be appropriate.

(8) For the purposes of this section all such apportionments as may be necessary shall be made.

(9) Where the reduced Irish tax credit falls to be computed in relation to a distribution, the particulars to be given by the company in the statement required by section 5 (dividend warrants) shall, in addition to the particulars required to be given apart from this section, include particulars of the reduced Irish tax credit.

(10) Where a distribution has been made before the making by the Government of an order to which section 361 (1) of the Income Tax Act, 1967, relates, and any double taxation relief would have fallen to be taken into account in relation to that distribution if this section had applied thereto, that relief shall be taken into account as far as possible in determining the reduced Irish tax credit in relation to the first distribution made by the company after the making of the order, and any part of that relief which cannot be so taken into account shall as far as possible be taken into account in relation to the next succeeding distribution, and so on.

(11) Where—

(a) the whole or part of an annual payment is made out of income represented by a distribution, and

(b) that distribution is made wholly or partly out of foreign income,

the tax credit in respect of that distribution shall, notwithstanding the provisions of section 88, be an amount equal to the amount which, by virtue of subsection (3) of this section, would be payable in respect of the said tax credit:

Provided that nothing in this subsection shall affect the amount of income which a distribution is treated as representing for the purposes of Schedule F.

168 Supplemental provisions concerning the determination of reduced Irish tax credit for section 167.

168.—(1) In this section “the reduced Irish tax credit”, “double taxation relief”, “the company”, “distributable income” and “distribution” have the same meanings as in section 167.

(2) Where any matter affecting the calculation of double taxation relief has not been fully determined at the time when the reduced Irish tax credit falls to be determined in relation to any distribution, the double taxation relief shall be estimated according to the best of the information available at the time, and, if it is subsequently found that the relief so estimated was excessive or deficient, the appropriate adjustment shall be made in determining the reduced Irish tax credit applicable to the next subsequent distribution on the occasion of which it is practicable to make the adjustment, and shall be made by reducing or, as the case may be, increasing the double taxation relief, as calculated for the purposes of that subsequent distribution, by the amount of the excess or the deficiency.

(3) For the purposes of this section, a distribution which is not expressed to be made for any specified period shall be deemed to be made for the last period of account of the company which ended before the distribution was made.

(4) Where a company makes, or is deemed under subsection (3) to have made, a distribution for an accounting period, the distribution shall be regarded for the purposes of this section and of section 167 as having been made out of the distributable income of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(5) This section and section 167 shall have effect as if references therein to double taxation relief included references to relief granted under section 163.

169 Limitations on deductions in respect of interest.

169.—Where, apart from this section, a company would be entitled to deductions in respect of—

(a) interest under the provisions of paragraph 1 (2) of Part III of Schedule 6 to the Income Tax Act, 1967 (provisions for giving effect to agreements for avoidance of double taxation in the case of the United Kingdom), and

(b) charges on income which are payments of interest to which the provisions of section 10 (6) apply,

the aggregate amount of the deductions which may be made under those provisions shall not exceed the amount specified in section 10 (6).

170 Patent royalties: provisions supplemental to section 34 of Finance Act, 1973.

170.—(1) In this section—

“disregarded income” means—

(a) income which by virtue of section 34 (2) of the Finance Act, 1973 (income from patent royalties), has been disregarded for purposes of income tax, and

(b) income which by virtue of section 34 (2) of the Finance Act, 1973, and section 11 (6) has been disregarded for purposes of corporation tax;

“other profits” includes a dividend or other distribution of a company which is resident in the State but does not include a distribution to which subsection (3) (a) (ii) applies.

(2) Where a distribution for an accounting period is made by a company in part out of disregarded income and in part out of other profits, the distribution shall be treated as if it consisted of two distributions respectively made out of disregarded income and out of other profits.

(3) (a) So much of any distribution as has been made out of disregarded income—

(i) shall not be regarded as income for any purpose of the Income Tax Acts; and

(ii) shall, where the recipient of such distribution is a company, be deemed for the purposes of this section to be disregarded income.

(b) The recipient of any distribution, including part of a distribution treated under subsection (2) as a distribution, made out of disregarded income shall not be entitled to a tax credit in respect of that distribution.

(4) (a) Where a company makes a distribution, including part of a distribution treated under subsection (2) as a distribution, in respect of any right or obligation to which section 178 (dividends at gross rate or of gross amount) relates and the distribution is made out of disregarded income, the company shall make a supplementary distribution of an amount equal to the amount of the tax credit which would have applied in respect of the distribution if subsection (3) (b) had not been enacted.

(b) Subsection (3) shall apply to a supplementary distribution under this subsection as if that supplementary distribution were a distribution made wholly out of disregarded income.

(5) In relation to any distribution (not being a supplementary distribution under this section), including part of a distribution treated under subsection (2) as a distribution, made by a company out of disregarded income, sections 5 and 83 (5) (Schedule F) shall apply to the company so that the statements provided for by those sections shall show, as respects each such distribution, in addition to the particulars required to be given apart from this section, that the distribution is made out of disregarded income.

(6) In relation to any supplementary distribution under subsection (4), section 5 shall apply to the company so that the statement required by that section shall show, in addition to the particulars required to be given apart from this section, the separate amount of such supplementary distribution.

(7) Where a company makes a distribution for an accounting period, the distribution shall be regarded for the purposes of this section as having been made out of the distributable income (as defined in section 64 (4)) of that period to the extent of that income and in relation to the excess of the distributions over that income, out of the most recently accumulated income.

(8) The provisions of subsections (5) and (6) of section 64 shall apply for the purposes of this section as they apply for the purposes of that section.

171 Construction of references to income tax paid by deduction and to repayment.

171.—In the Tax Acts, unless the context otherwise requires, references to—

(a) income tax paid by a person by deduction shall be construed as including references to a tax credit to which he is entitled, and

(b) repayment of income tax shall be construed as including references to payment of a tax credit.

172 Continuation of elections.

172.—(1) Where before the year 1976-77 a company has for purposes of income tax made any election or done any other act of a description which—

(a) would have had continuing effect for income tax for that year;

(b) may also be made for corporation tax;

then that election or act shall for corporation tax be valid and effectual as if duly made or done for that tax, and have effect from the beginning of the first accounting period for which the company is within the charge to corporation tax in respect of the matter in question.