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Foreign dividends.
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50.— (1) The Principal Act is amended in section 21B—
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(a) in subsection (1)(b) by substituting the following for subparagraph (i):
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“(i) references to a company by which a dividend is paid apply only to a company, where throughout the period out of the profits of which the dividend was paid—
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(I) the company was, by virtue of the law of a relevant territory, resident for the purposes of tax in such a relevant territory, and for this purpose ‘tax’, in relation to a relevant territory, means any tax imposed in the relevant territory which corresponds to corporation tax in the State, or
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(II) the principal class of shares of the company or, where the company was a 75 per cent subsidiary of another company, the principal class of shares of that other company, was substantially and regularly traded on a stock exchange in the State, on one or more than one recognised stock exchanges in a relevant territory or territories or on such other stock exchange as may be approved of by the Minister for Finance for the purposes of Chapter 8A of Part 6,”,
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(b) in subsection (1) by inserting the following after paragraph (b):
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“(c) For the purposes of paragraph (b)(i)(II), sections 412 to 418 shall apply as those sections would apply for the purposes of Chapter 5 of Part 12 if section 411(1)(c) were deleted.”,
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(c) in subsection (2) by substituting the following for paragraph (a):
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“(a) subject to paragraph (b), the amount of a dividend to be treated as paid out of trading profits of a company shall be—
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(i) where the dividend is paid out of specified profits, so much of the dividend, as bears to the amount of that dividend the same proportion as the amount of trading profits of the company contained in the specified profits bears to the amount of those specified profits of the company, and
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(ii) where the dividend is not paid out of specified profits so much of the dividend, as bears to the amount of that dividend the same proportion as the amount of trading profits of the company for the period out of which the dividend is paid bears to the total profits of the company for that period, and”,
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and
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(d) by substituting the following for subsection (4):
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“(4) (a) This subsection applies to a dividend paid to a company (in this subsection referred to as the ‘first-mentioned company’) by another company and the first-mentioned company—
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(i) does not own, directly or indirectly, either alone or together with a person who is connected (within the meaning of section 10) with the first-mentioned company, more than 5 per cent of the share capital of the other company, and
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(ii) does not hold more than 5 per cent of the voting rights in the other company.
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(b) Where the income of a company which is chargeable to tax under Case III of Schedule D includes a dividend, being a dividend to which this subsection applies, paid to the company by another company then the dividend shall be treated for the purposes of subsection (3) as a dividend paid by the other company out of trading profits of the other company.
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(c) Where the income of a company which is income chargeable to tax under Case I of Schedule D would, but for this paragraph, include a dividend to which this subsection applies, then, except where otherwise expressly provided by the Corporation Tax Acts, corporation tax shall not be chargeable on the dividend, nor shall the dividend be taken into account in computing income for corporation tax.”.
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(2) This section shall apply to dividends received on or after 1 January 2010.
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