Finance Act, 1988

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Relief from corporation tax in respect of certain dividends from a non-resident subsidiary.

41.—(1) (a) In this section—

“approved investment plan” means an investment plan in respect of which the Minister has given a certificate in accordance with subsection (2) to the company concerned;

“investment plan” means a plan of a company resident in the State which is directed towards the creation or maintenance of employment in the State in trading operations carried on, or to be carried on, in the State and which has, prior to its implementation, been submitted to the Minister by the company for the purpose of enabling it to claim relief under this section;

“Minister” means the Minister for Finance;

“relevant dividends” means dividends received on or after the 6th day of April, 1988, by a company resident in the State (being the company claiming the relief under this section) from a foreign subsidiary of the company and which are—

(i) applied, not earlier than the 6th day of April, 1988, and within a period which commences one year before the day on which the dividends are received in the State and ends two years after that day, for the purposes of an approved investment plan, and

(ii) specified in a certificate given by the Minister under subsection (2);

“relief under this section” means, in relation to a company for an accounting period, the amount by which any corporation tax payable by the company is reduced by virtue of subsection (3).

(b) (i) The reference in paragraph (a) to “a foreign subsidiary” means a 51 per cent. subsidiary of a company where the company is resident in the State and the subsidiary is a resident of the United States of America or of a territory with the government of which arrangements having the force of law by virtue of section 361 of the Income Tax Act, 1967 , have been made.

(ii) For the purposes of subparagraph (i)—

“resident of the United States of America” has the meaning assigned to it by the Convention set out in Schedule 8 to the Income Tax Act, 1967 ;

a company shall be regarded as being a resident of a territory other than the United States of America if it is so regarded under the provisions of arrangements made with the government of that territory and having the force of law by virtue of section 361 of the said Act.

(2) Where an investment plan has been duly submitted by a company and the Minister—

(a) is satisfied that the plan is directed towards the creation or maintenance of employment in the State in trading operations carried on, or to be carried on, in the State, and

(b) has been informed in writing by the company of the amount of dividends concerned,

the Minister may give a certificate to the company certifying that an amount of dividends specified in the certificate shall be an amount of relevant dividends.

(3) Subject to subsection (4), where a company claims and proves that it has received in an accounting period any amount of relevant dividends, the amount of its income for the period represented by those dividends shall not be taken into account in computing the income of the company for that accounting period for the purposes of corporation tax.

(4) Where, in relation to a certificate given to a company under subsection (2), the Minister considers that, as regards the approved investment plan concerned, all or part of the relevant dividends have not been applied within the period provided for in the definition of “relevant dividends” in subsection (1) (a), he may, by notice in writing to the company, reduce the amount of the relevant dividends specified in the certificate by so much as has not been so applied and, accordingly, where the amount of the relevant dividends specified in a certificate is so reduced—

(a) in a case where relief under this section has been granted in respect of the amount of the relevant dividends specified in the certificate before such a reduction of that amount, the inspector shall make such assessments or additional assessments as are necessary to recover the relief given in respect of the amount of the reduction, and

(b) in a case where a claim for relief has not yet been made, relief shall not be due under this section in respect of the amount of the reduction.

(5) A claim for relief under this section shall be made in writing to the inspector and shall be submitted together with the company's return of profits for the period in which the relevant dividends are received in the State.