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22 1997

FINANCE ACT, 1997

Chapter IV

Corporation Tax

Rate of corporation tax.

59. —(1) As respects any accounting period ending on or after the 1st day of April, 1997, section 1 (as amended by section 54 of the Finance Act, 1995) of the Corporation Tax Act, 1976 , is hereby amended by the substitution of the following subsection for subsection (1):

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

(a) 38 per cent. for—

(i) each financial year until and including the year 1996, and

(ii) that part of the financial year 1997 beginning on the first day of January, 1997, and ending on the 31st day of March, 1997;

and

(b) 36 per cent. for—

(i) that part of the financial year beginning on the 1st day of April, 1997, and ending on the 31st day of December, 1997, and

(ii) each subsequent financial year.”.

(2) The Sixth Schedule shall have effect for the purpose of supplementing this section.

Amendment of section 28A (reduced rate of corporation tax for certain income) of Corporation Tax Act, 1976 .

60. —(1) Section 28A (as inserted by the Finance Act, 1996) of the Corportion Tax Act, 1976, is hereby amended—

(a) as respects accounting periods ending on or after the 1st day of April, 1997, by the substitution in subsection (1) of “28 per cent.” for “30 per cent.”, and

(b) in subsection (10)—

(i) in paragraph (a), by the substitution for the definition of “S” of the following:

“S is an amount equal to so much of the profits of the company for the accounting period as are charged to tax in accordance with subsection (1),

and”,

(ii) in paragraph (b), by the substitution for subparagraph (ii) of the following:

“(ii) by an amount equal to so much of the profits of the company for the accounting period as are charged to tax in accordance with subsection (1).”.

(2) For the purposes of paragraph (a) of subsection (1), where an accounting period of a company begins before the 1st day of April, 1997, and ends on or after that day, it shall be divided into two parts, one beginning on the day on which the accounting period begins and ending on the 31st day of March, 1997, and the other beginning on the 1st day of April, 1997, and ending on the day on which the accounting period ends, and both parts shall be treated for the purpose of this section as if they were separate accounting periods of the company.

(3) Paragraph (b) of subsection (1) shall have effect as respects accounting periods ending on or after the 16th day of June, 1996.

Repeal of section 80 (exemption of income from carrying out of voluntary health insurance schemes) of Corporation Tax Act, 1976 .

61. —(1) In this section—

the Board” means the Voluntary Health Insurance Board;

market value” has the meaning assigned to it in section 49 of the Capital Gains Tax Act, 1975 .

(2) Section 80 of the Corporation Tax Act, 1976 , shall be deemed to have been repealed with effect from the 1st day of March, 1997.

(3) The provisions of section 16 of the Corporation Tax Act, 1976 , shall not apply to a loss incurred by the Board in an accounting period ending before the 1st day of March, 1997.

(4) Notwithstanding any other provision of the Tax Acts, bonds and shares held by the Board on the 28th day of February, 1997, in the course of the business of carrying out schemes of voluntary health insurance shall be deemed to have been disposed of and immediately reacquired by the Board on that date at the assets' market value on that date.

Exemption of harbour authorities and port companies.

62. —(1) (a) In this section—

relevant body” means—

(i) a harbour authority within the meaning of the Harbours Act, 1946 ,

(ii) a company established pursuant to section 7 of the Harbours Act, 1996, and

(iii) any other company which controls a harbour and which carries on a trade which consists wholly or partly of the provision in that harbour of such facilities and accommodation for vessels, goods and passengers as are ordinarily provided by harbour authorities specified in paragraph (i), and companies specified in paragraph (ii) which control harbours, situate within the State, in those harbours;

relevant profits or gains” means so much of the profits or gains of a relevant body controlling a harbour situate within the State as arise from the provision in that harbour of such facilities and accommodation for vessels, goods and passengers as are ordinarily provided by—

(i) harbour authorities specified in paragraph (i), and

(ii) companies specified in paragraph (ii),

of the definition of “relevant body”, which control harbours, situate within the State, in those harbours.

(b) For the purposes of this section, where an accounting period falls partly in a period, the part of the accounting period falling into the period shall be regarded as a separate accounting period.

(2) Section 343 of the Income Tax Act, 1967 , shall be deemed to have been repealed with effect from the 1st day of January, 1997.

(3) Exemption shall be granted from tax under Schedule D in respect of relevant profits or gains in the period beginning on the 1st day of January, 1997, and ending on the 31st day of December, 1998.

(4) Subsection (3) shall apply to a relevant body which is a harbour authority referred to in paragraph (i) of the definition of “relevant body” as if “in the period beginning on the 1st day of January, 1997, and ending on the 31st day of December, 1998” were deleted.

(5) Where a relevant body is chargeable to tax under Schedule D in respect of relevant profits or gains, the relevant profits or gains shall be reduced by an amount equal to—

(a) as respects accounting periods falling wholly or partly in the year 1999, two-thirds of the said relevant profits or gains, and

(b) as respects accounting periods falling wholly or partly in the year 2000, one-third of the said relevant profits or gains.

Exemption of income of body designated under Irish Takeover Panel Act, 1997.

63. —Notwithstanding any provision of the Corporation Tax Acts, income arising in any accounting period ending after the 30th day of April, 1997, to the body designated by the Minster for Enterprise and Employment under section 3 of the Irish Takeover Panel Act, 1997, shall be exempt from corporation tax.

Amendment of section 56 (relief for gifts to The Enterprise Trust Ltd.) of Finance Act, 1992 .

64. —Section 56 (as amended by section 56 of the Finance Act, 1996) of the Finance Act, 1992 , is hereby amended—

(a) by the substitution in paragraph (a) of subsection (2) of “on or before the 31st day of December, 1999” for “before the 31st day of December, 1997”,

(b) by the substitution in subsection (3) of “(hereafter in this section referred to as the ‘donor’)” for “(hereafter in this subsection referred to as the ‘donor’)”,

(c) by the substitution of the following proviso for the proviso to subsection (3):

“Provided that in determining the net amount of the gift, the amount or value of any consideration received by the said donor as a result of making the gift, whether received directly or indirectly from the company or any other person, shall be deducted from the amount of the gift and relief under this section shall not be given to a donor for an accounting period—

(i) if the net amount of the gift (or the aggregate of the net amounts of gifts) made by it in that accounting period, being a gift or gifts, as the case may be, to which this section applies, does not exceed £500,

(ii) to the extent to which the net amount of the gift (or the aggregate of the net amounts of gifts) made by it in that accounting period, being a gift or gifts, as the case may be, to which this section applies, exceeds £100,000,

(iii) in respect of a gift made at any time in the year ending on the 31st day of December in the year 1998 or 1999, if, at that time, the aggregate of the net amounts of all gifts to which this section applies made to the company within that year exceeds £1,500,000.”,

and

(d) by the addition, after subsection (4), of the following subsections:

“(5) Where a donor makes a gift in respect of which relief is not to be given by virtue of subparagraph (iii) of the proviso to subsection (3), the company shall, by notice in writing given to the donor within 30 days of the making of the gift, advise the donor accordingly.

(6) Where a gift to which this section applies is made by a donor in an accounting period of the donor which is less than 12 months, the amounts specified in subparagraphs (i) and (ii) of the proviso to subsection (3) shall be proportionately reduced.”.

Amendment of section 51 (relief for gifts made to First Step) of Finance Act, 1993 .

65. —Section 51 (as amended by section 67 of the Finance Act, 1995) of the Finance Act, 1993 , is hereby amended—

(a) by the substitution in paragraph (a) of subsection (2) of “1st day of January, 2000” for “1st day of June, 1997”, and

(b) in the proviso to subsection (3) by the substitution of the following subparagraphs for subparagraph (iii) of paragraph (b):

“(iii) in respect of a gift made at any time in the year ending on the 31st day of May in the year 1994, 1995, 1996, 1997, 1998 or 1999, if, at that time, the aggregate of the net amount of all gifts to which this section applies made to First Step within that year exceeds £1,500,000, or

(iv) in respect of a gift made at any time in the period commencing on the 1st day of June, 1999, and ending on the 31st day of December, 1999, if, at that time, the aggregate of the net amount of all gifts to which this section applies made to First Step within that period exceeds £875,000.”.

Amendment of section 36 (amendment of section 39B (relief in relation to income from certain trading operations carried on in Custom House Docks Area) of Finance Act, 1980) of Finance Act, 1988 .

66. —(1) Section 36 of the Finance Act, 1988 , is hereby amended in paragraph (a) of subsection (4) by the substitution for the definition of “foreign life assurance business” of the following definition:

“‘foreign life assurance business’ means relevant trading operations within the meaning of the said section 39B consisting of life assurance business with policy holders and annuitants who, at the time such business is contracted, reside outside the State and as regards any policy issued or contract made, as the case may be, with such policy holders or annuitants in the course of such business, such policy or contract does not provide for—

(a) the granting of any additional contractual rights, or

(b) an option to have another policy or contract substituted for it,

at a time when the policy holder or annuitant, as the case may be, resides in the State;”.

(2) This section shall apply and have effect as on and from the 6th day of April, 1997.

Amendment of section 35 (profits of life business) of Corporation Tax Act, 1976 .

67. —(1) Section 35 of the Corporation Tax Act, 1976 , is hereby amended by the insertion after subsection (1A) of the following subsection:

“(1B) (a) In this subsection—

policy of assurance’ means—

(i) a policy of assurance issued by a company (to which subsection (1A) applies) to an individual who, on the date the policy is issued, resides outside the State and who continuously so resides throughout a period of not less than six months commencing on that date, or

(ii) a policy issued or a contract made which is not a retirement benefits policy solely by virtue of the age condition not being complied with;

relevant amount’—

(i) in relation to a policy of assurance, means the amount determined by the formula—

V-P

and

(ii) in relation to a retirement benefits policy, means the amount determined by the formula—

(V-P) ×

75

___

100

where—

V is the amount or the aggregate of amounts by which the market value of all the entitlements under the policy of assurance or the retirement benefits policy, as the case may be, increased during any period or periods in which the policy holder was residing in the State, and

P is the amount of premiums or like sums paid in respect of the policy of assurance or the retirement benefits policy, as the case may be, during any period or periods in which the policy holder was residing in the State;

retirement benefits policy’ means a policy issued or a contract made by a company (to which subsection (1A) applies)—

(i) to or with, as the case may be, an individual who, on the date the policy is issued or the contract is made, resides outside the State and who continuously so resides throughout a period of not less than six months commencing on that date, and

(ii) on terms which include the condition (in this subsection referred to as the ‘age condition’) that the main benefit secured by the policy or contract, is the payment by the company (otherwise than on the death or disability of the individual) of a sum to the individual on or after the individual attains the age of sixty years and before the individual attains the age of seventy years and that condition is complied with.

(b) Where, in respect of a policy of assurance or a retirement benefits policy, a sum is payable (otherwise than by reason of death or disability of the policy holder) to a policy holder who is resident or ordinarily resident in the State, (within the meaning of Chapter I of Part VII of the Finance Act, 1994 ), by a company, then—

(i) the company shall be deemed, for the purposes of this Act, to have made, in the year of assessment in which the sum is payable, an annual payment of an amount equal to the relevant amount in relation to the policy of assurance or the retirement benefits policy, as the case may be, and section 151 (income tax on payments) shall apply for the purposes of the charge, assessment and recovery of such tax,

(ii) the company shall be entitled to deduct the tax out of the sum otherwise payable,

(iii) the recipient of the sum payable shall not be entitled to repayment of, or credit for, such tax so deducted, and

(iv) the sum paid, or any part thereof, shall not be reckoned in computing total income of the recipient thereof, for the purposes of the Income Tax Acts.”.

(2) This section shall apply and have effect as on and from the 6th day of April, 1997.

Amendment of section 36 (investment income reserved for policy holders) of Corporation Tax Act, 1976 .

68. —(1) Section 36 (as amended by section 48 of the Finance Act, 1996) of the Corporation Tax Act, 1976 , is hereby amended by the substitution for subsection (2) of the following subsections:

“(2) Where in a financial year the rate per cent. (in this subsection and in subsection (2A) referred to as the ‘specified rate per cent.’) of corporation tax specified in paragraph (b) of subsection (1) of section 1 exceeds the standard rate per cent. for either of the years of assessment, part of each of which falls within the financial year, the corporation tax in respect of any of the said unrelieved profits of the company for that year shall be reduced on a claim in that regard being made by the company, by so much of that tax as is equal to the amount by which—

(a) the corporation tax chargeable on the company for that year in respect of the part specified in subsection (5) of the said unrelieved profits,

exceeds—

(b) the corporation tax which would be so chargeable in respect of that part of those profits if the specified rate per cent. for each part of the financial year which coincides with a part of a year of assessment were equal to the standard rate per cent. for the year of assessment.

(2A) In computing that part of those profits for the purposes of paragraph (b) of subsection (2), subsection (1A) of section 13 shall apply as if the rate per cent. of capital gains tax specified in subsection (3) of section 3 of the Capital Gains Tax Act, 1975 , were the specified rate per cent.”.

(2) This section shall apply and have effect as on and from the 1st day of January, 1997.

Amendment of section 46A (deemed disposal and reacquisition of certain assets) of Corporation Tax Act, 1976 .

69 .—(1) Section 46A (as amended by section 11 of the Finance Act, 1993 ) of the Corporation Tax Act, 1976 , is hereby amended in subsection (3) by the substitution for paragraph (a) of the following paragraph:

“(a)(i) assets to which section 19 of the Capital Gains Tax Act, 1975 , applies by virtue of any provision of the Capital Gains Tax Acts, other than where such assets are held in connection with a contract or other arrangement which secures the future exchange of the assets for other assets, being assets to which the said section 19 does not apply, or

(ii) assets which are strips within the meaning of section 33 of the Finance Act, 1997,”.

(2) This section shall apply and have effect as on and from the 26th day of March, 1997.