Finance Act, 1992

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Reduction of corporation tax.

77.—(1) In this section—

“petroleum profits on which corporation tax falls finally to be borne”, in relation to a company, means the amount of the petroleum profits of the company after making all deductions and giving or allowing all reliefs that for the purposes of corporation tax are made from, or given or allowed against, or are treated as reducing—

(a) those profits, or

(b) income or chargeable gains, if any, included in those profits;

“relevant petroleum lease” means a petroleum lease in respect of a relevant field, which is a field which was discovered by petroleum exploration activities carried on under a licence (other than a petroleum lease) which authorises the carrying on of those activities for a period which, apart from any extension of the period or revision or renewal of the licence—

(a) is not longer than 10 years, where the petroleum lease is granted by the Minister for Energy before the 1st day of June, 2003,

(b) is longer than 10 years and is not longer than 15 years, where the petroleum lease is granted by the Minister for Energy before the 1st day of June, 2007, or

(c) is longer than 15 years, where the petroleum lease is granted by the Minister for Energy before the 1st day of June, 2013.

(2) Corporation tax payable by a company for an accounting period shall be reduced by the amount, if any, determined by the formula

where—

I is the amount for the accounting period of the income to which this section applies, and

R is the rate per cent. of corporation tax specified in subsection (1) of section 1 of the Corporation Tax Act, 1976 , for the financial year or years in which the accounting period falls:

Provided that where part of the accounting period falls in one financial year (referred to hereafter in this proviso as the “first-mentioned financial year”) and the other part falls in the financial year succeeding the first-mentioned financial year and different rates of corporation tax are in force under subsection (1) of section 1 of the said Act for each of those years, then R shall be the rate per cent. determined by the formula

where—

A is the rate per cent. in force for the first-mentioned financial year,

B is the rate per cent. in force for the financial year succeeding the first-mentioned financial year,

C is the length of that part of the accounting period falling in the first-mentioned financial year,

D is the length of that part of the accounting period falling in the financial year succeeding the first-mentioned financial year, and

E is the length of the accounting period.

(3) The income to which this section applies shall be the income of a company for an accounting period determined by the formula

where—

F is the amount for the accounting period of the company's petroleum profits on which corporation tax falls finally to be borne,

G is the amount to be included in the company's profits brought into charge to corporation tax for the accounting period in respect of chargeable gains accruing to the company from disposals of petroleum-related assets,

S is the aggregate of the income of the company for the accounting period which is—

(a) trading income attributable to sales of petroleum won by it, or

(b) income, other than trading income, from the enjoyment or exploitation of petroleum rights,

under a relevant petroleum lease granted to it or a company associated with it, and

T is the aggregate of the income of the company for the accounting period from its petroleum trade or other petroleum activities.

(4) For the purposes of subsection (3), the income of a company for an accounting period which is trading income attributable to sales of petroleum won by the company under a relevant petroleum lease shall be the income, if any, determined by the formula

where—

O is the income of the company for the accounting period from its petroleum trade,

P is the aggregate of money or money's worth which is receivable bythe company from sales in the accounting period of petroleum won by it under the relevant petroleum lease, and

Q is the aggregate of money or money's worth which is receivable by the company from sales of petroleum in the accounting period in the course of carrying on its petroleum trade.