Income Tax Act, 1967.
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SCHEDULE 10 Provisions as to Relief from Income Tax (Including Sur-tax) and Corporation Profits Tax by way of Credit in Respect of Foreign Tax | ||
Sections 358 , 360 , 361 , 555 . | ||
Interpretation | ||
1.—(1) In this Schedule, except where the context otherwise requires— | ||
“arrangements means” arrangements for the time being in force by virtue of section 361 , or of section 12 of the Finance Act, 1950 , or of section 14 of the Finance Act, 1955 ; | ||
“income tax” includes sur-tax, | ||
“income”, in relation to corporation profits tax, means profits; | ||
“total income” means total income from all sources as estimated in accordance with the provisions of this Act; | ||
“the Irish taxes” means income tax (including sur-tax) and corporation profits tax; | ||
“foreign tax” means, in relation to any territory in regard to which arrangements have the force of law, any tax chargeable under the laws of that territory for which credit may be allowed under the arrangements. | ||
(2) Any reference in this Schedule to foreign tax shall be construed, in relation to credit to be allowed under any arrangements, as a reference only to tax chargeable under the laws of the territory in regard to which the arrangements are made. | ||
General | ||
2.—(1) Subject to the provisions of this Schedule, where, under the arrangements, credit is to be allowed against any of the Irish taxes chargeable in respect of any income, the amount of the Irish taxes so chargeable shall be reduced by the amount of the credit. | ||
(2) The credit to be allowed shall be first applied in reducing the amount of any corporation profits tax chargeable in respect of the income and, so far as it cannot be so applied, in reducing the income tax chargeable in respect thereof. | ||
(3) Nothing in this paragraph authorises the allowance of credit against any Irish tax against which credit is not allowable under the arrangements. | ||
Requirements as to incorporation and residence | ||
3.—(1) Credit shall not be allowed against corporation profits tax unless the company in respect of whose income the corporation profits tax is chargeable is incorporated by or under the laws of the State. | ||
(2) Credit shall not be allowed against income tax for any year of assessment unless the person in respect of whose income the tax is chargeable is resident in the State for that year. | ||
Limit on total credit—corporation profits tax | ||
4. The amount of the credit to be allowed against corporation profits tax for foreign tax in respect of any income shall not exceed the corporation profits tax attributable to that income. | ||
Limit on total credit—income tax | ||
5.—(1) The amount of the credit to be allowed against income tax for foreign tax in respect of any income shall not exceed the sum which would be produced by computing the amount of that income in accordance with this Act, and then charging it to income tax for the year of assessment for which the credit is to be allowed, but at the following rate, that is to say— | ||
(a) in the case of a person whose income is chargeable to income tax but not to sur-tax, a rate ascertained by dividing the income tax payable by that person for that year by the amount of the total income of that person for that year; | ||
(b) in the case of a person whose income is chargeable to surtax, the sum of the following rates— | ||
(i) the rate which would have been the appropriate rate in his case if his income had been chargeable to income tax but not to sur-tax, and | ||
(ii) the rate ascertained by dividing the sur-tax payable by him for that year by the amount of his total income for that year: | ||
Provided that where, under the arrangements, credit is not to be allowed against sur-tax for the year, the rate shall be calculated in all cases as in the case of persons whose incomes are chargeable to income tax but not to sur-tax, and where, under the arrangements, credit is not to be allowed except against sur-tax for the year, the rate shall be that ascertained by dividing the sur-tax payable by the person in question for the year by the amount of his total income for the year. | ||
(2) For the purpose of determining the said rate, the tax payable by any person for any year shall be computed without regard to any relief in respect of life assurance premiums and without any reduction thereof for any credit allowed or to be allowed under any arrangements having effect by virtue of section 361 but shall be deemed to be reduced by any tax which, otherwise than under section 456, the person in question is entitled to charge against any other person, and the total income of any person shall be deemed to be reduced by the amount of any income the income tax upon which that person is entitled to charge as aforesaid. | ||
(3) Where credit for foreign tax falls to be allowed in respect of any income and any relief would, but for the provisions of this subparagraph, fall to be allowed in respect of that income under section 365, the said relief shall not be allowed. | ||
6. Without prejudice to the provisions of the last preceding paragraph, the total credit to be allowed to a person against income tax for any year of assessment shall not exceed the total income tax payable by the person in question for that year of assessment, less any tax which, otherwise than under section 456, that person is entitled to charge against any other person. | ||
Effect on computation of income of allowance of credit | ||
7. (1) Subject to the provisions of this paragraph, where credit for foreign tax falls to be allowed against any of the Irish taxes in respect of any income, no deduction for foreign tax (whether in respect of that or any other income) shall be made in computing the amount of that income for the purposes of corporation profits tax. | ||
(2) Where the income includes a dividend and, under the arrangements, foreign tax not chargeable directly or by deduction in respect of the dividend is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the amount of the income shall for the purposes of corporation profits tax, be treated as increased by the amount of the foreign tax not so chargeable which falls to be taken into account in computing the amount of the credit. | ||
(3) Notwithstanding anything in the preceding provisions of this paragraph, where part of the foreign tax in respect of the income (including any foreign tax which, under subparagraph (2), falls to be treated as increasing the amount of the income) cannot be allowed as a credit against any of the Irish taxes, the amount of the income shall be treated for the purposes of corporation profits tax as reduced by that part of that foreign tax. | ||
8. (1) Where credit for foreign tax falls to be allowed against any of the Irish taxes in respect of any income, the following provisions of this paragraph shall have effect as respects the computation, for the purposes of income tax, of the amount of that income. | ||
(2) Where the income tax payable depends on the amount received in the State, the said amount shall be treated as increased by the amount of the credit allowable against income tax. | ||
(3) Where subparagraph (2) does not apply— | ||
(a) no deduction shall be made for foreign tax (whether in respect of the same or any other income), and | ||
(b) where the income includes a dividend and under the arrangements foreign tax not chargeable directly or by deduction in respect of the dividend is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the amount of the income shall be treated as increased by the amount of the foreign tax not so chargeable which falls to be taken into account in computing the amount of the credit, but | ||
(c) notwithstanding anything in the preceding provisions of this subparagraph, where any part of the foreign tax in respect of the income (including any foreign tax which, under clause (b) of this subparagraph, falls to be treated as increasing the amount of the income) either falls to be allowed as a credit against corporation profits tax, or cannot be allowed as a credit against any of the Irish taxes, the amount of the income shall be treated for the purposes of income tax as reduced by that part of that foreign tax: | ||
Provided that in relation to foreign tax in respect of income arising before the 1st day of April, 1966, the provisions of this paragraph shall have effect as if the words “either falls to be allowed against corporation profits tax or” were omitted from this clause and, for the purposes of this proviso, in a case in which the foreign tax is chargeable in respect of income arising in a period of which a part is before the 1st day of April, 1966, and a part after the 31st day of March, 1966, the foreign tax shall be apportioned in proportion to the respective lengths of those parts. | ||
(4) In relation to the computation of the total income of a person for the purpose of determining the rate mentioned in paragraph 5, the preceding provisions of this paragraph shall have effect subject to the following modifications: | ||
(a) for the reference in subparagraph (2) to the amount of the credit allowable against income tax, there shall be substituted a reference to the amount of the foreign tax in respect of the income (in the case of a dividend, foreign tax not chargeable directly or by deduction in respect of the dividend being left out of account), and | ||
(b) clauses (b) and (c) of subparagraph (3) shall not apply, | ||
and subject to those modifications shall have effect in relation to all income in the case of which credit falls to be allowed for foreign tax under any arrangements. | ||
Special Provisions as to Dividends | ||
9. Where, in the case of any dividend, foreign tax not chargeable directly or by deduction in respect of the dividend is, under the arrangements, to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes in respect of the dividend, the foreign tax not so chargeable which is to be taken into account shall be that borne by the body corporate paying the dividend upon the relevant profits in so far as it is properly attributable to the proportion of the relevant profits which is represented by the dividend. | ||
The relevant profits are: | ||
(a) if the dividend is paid for a specified period, the profits of that period; | ||
(b) if the dividend is not paid for a specified period, but is paid out of specified profits, those profits; | ||
(c) if the dividend is paid neither for a specified period nor out of specified profits, the profits of the last period for which accounts of the body corporate were made up which ended before the dividend became payable: | ||
Provided that if, in a case falling under subparagraph (a) or subparagraph (c), the total dividend exceeds the profits available for distribution of the period mentioned in subparagraph (a) or subparagraph (c), as the case may be, the relevant profits shall be the profits of that period plus so much of the profits available for distribution of preceding periods (other than profits previously distributed or previously treated as relevant for the purposes of this paragraph) as is equal to the excess; and for the purposes of this proviso the profits of the most recent preceding period shall first be taken into account, then the profits of the next most recent preceding period, and so on. | ||
10. Where— | ||
(a) the arrangements; provide, in relation to dividends of some classes, but not in relation to dividends of other classes, that foreign tax not chargeable directly or by deduction in respect of dividends is to be taken into account in considering whether any, and if so what, credit is to be allowed against the Irish taxes, in respect of the dividends, and | ||
(b) a dividend is paid which is not of a class in relation to which the arrangements so provide, | ||
then, if the dividend is paid to a company which controls, directly or indirectly, not less than one half of the voting power in the company paying the dividend, credit shall be allowed as if the dividend were a dividend of a class in relation to which the arrangements so provide. | ||
Miscellaneous | ||
11. Credit shall not be allowed under the arrangements against the Irish taxes chargeable in respect of any income of any person if the person in question elects that credit shall not be allowed in respect of that income. | ||
12. Where, under the arrangement, relief may be given either in the State or in the territory in regard to which the arrangements are made in respect of any income and it appears that the assessment to income tax or to corporation profits tax made in respect of the income is not made in respect of the full amount thereof or is incorrect having regard to the credit, if any, which falls to be given under the arrangements, any such additional assessments may be made as are necessary to ensure that the total amount of the income is assessed and the proper credit, if any, is given in respect thereof, and where the income is entrusted to any person in the State for payment, any such additional assessment to income tax may be made on the recipient of the income under Case IV of Schedule D. | ||
13. (1) Subject to paragraph 14, any claim for an allowance by way of credit for foreign tax in respect of any income shall be made in writing to the inspector not later than six years from the end of the relevant year of assessment, and, if the inspector objects to any such claim, it shall be heard and determined by the Special Commissioners as if it were an appeal to them against an assessment to income tax and the provisions of this Act relating to the rehearing of an appeal or the statement of a case for the opinion of the High Court on a point of law, shall, with the necessary modifications, apply accordingly. | ||
(2) In this paragraph “the relevant year of assessment” means, in relation to credit for foreign tax in respect of any income, the year of assessment for which that income falls to be charged to income tax or would fall so to be charged if any income tax were chargeable in respect thereof. | ||
14. Where the amount of any credit given under the arrangements is rendered excessive or insufficient by reason of any adjustment of the amount of any tax payable either in the State or in the territory in regard to which the arrangements are made, nothing in this Act or in the enactments relating to corporation profits tax limiting the time for the making of assessments or claims for relief shall apply to any assessment or claim to which the adjustment gives rise, being an assessment or claim made not later than six years from the time when all such assessments, adjustments and other determinations have been made, as are material in determining whether any, and if so what, credit falls to be given. |