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Amendment of Schedule 24 (relief from income tax and corporation tax by means of credit in respect of foreign tax) to Principal Act.
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71.—(1) Schedule 24 of the Principal Act is amended—
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(a) in paragraph 4(4), by the substitution for clauses (a) to (c) and the words “gain is reduced by virtue of—”, which immediately precede those clauses, of the following:
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“gain—
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(a) is charged at the rate specified in section 21A, the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be the rate so specified,
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(b) is reduced by virtue of section 448 by any fraction, the rate of tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as reduced by that fraction,
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(c) is to be computed in accordance with section 713(3) or 738(2), the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as the standard rate of income tax,
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(d) is to be computed in accordance with section 723(6), the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as 20 per cent,
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(e) is reduced by virtue of section 644B, the rate of corporation tax payable by the company on its income and chargeable gains for the relevant accounting period shall be treated as reduced by that fraction,”,
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and
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(b) in paragraph 9B—
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(i) by the substitution in subparagraph (2) for “there shall be treated for the purposes of subparagraph (1) as tax paid by the foreign company in respect of its profits any underlying tax payable by the third company, to the extent to which it would be taken into account” of:
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“there shall be treated for the purposes of subparagraph (1) as tax paid by the foreign company in respect of its profits—
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(a) any underlying tax payable by the third company, and
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(b) any tax directly charged on the dividend which neither company would have borne had the dividend not been paid,
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to the extent to which it would be taken into account”,
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and
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(ii) in subparagraph (3) by the insertion after “tax payable by the fourth company” of “or tax directly charged on the dividend”.
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(2) (a) This section shall—
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(i) in the case of subsection (1)(a), apply as respects accounting periods ending on or after 1 January 2000, and
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(ii) in the case of subsection (1)(b), be deemed to have applied as respects accounting periods ending on or after 1 April 1998.
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(b) For the purposes of paragraph (a)(i), where an accounting period of a company begins before 1 January 2000 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 31 December 1999 and the other beginning on 1 January 2000 and ending on the day on which the accounting period ends, and both parts shall be treated for the purposes of this section as if they were separate accounting periods of the company.
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