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18 1977

FINANCE ACT, 1977

Chapter IV

Corporation Tax in Relation to Certain Manufacturing Companies

Definitions.

20. —In this Chapter—

employed contributor” and “employment contributions” have the same meanings as in the Social Welfare Act, 1952 ;

relevant period” means an accounting period or part of an accounting period of a company falling within the period from the 1st day of January, 1977, to the 31st day of December, 1979;

1977 period” means an accounting period or part of an accounting period of a company falling within the financial year 1977 and any corresponding expression in which a reference to 1978 or 1979 is followed by the word “period” means an accounting period or part of an accounting period of a company falling within the financial year 1978 or 1979, as the case may be;

specified trade” means a trade which, in each relevant period for which a claim is made under this Chapter, consists wholly of the manufacture of goods in the State:

Provided that—

(a) a trade shall be regarded as consisting wholly of the manufacture of goods in the State in a relevant period if the amount receivable by the person carrying on the trade from the sale in the period of goods manufactured in the State in the course of the trade is not less than 90 per cent. of the total amount receivable by the person from all sales made in the course of the trade in the period, and

(b) where—

(i) there are two companies one of which manufactures goods in the State and the other of which sells them in the course of its trade, and

(ii) one of the companies holds more than 90 per cent. of the ordinary shares in the other company or persons who have a controlling interest in one company hold, either directly or indirectly, more than 90 per cent. of the ordinary shares in the other company, the goods manufactured in the State by one of the companies shall, when sold in the course of its trade by the other company, be deemed to be manufactured in the State by that other company.

Standard year.

21. —The standard year in relation to a specified trade means the financial year 1976, and the standard year shall be applicable in relation to the specified trade whether or not during the whole or part of the standard year the specified trade was carried on by a person other than the company by which it is carried on in the relevant period or separate parts of the specified trade were carried on by different persons.

Apportionments arising from transfer of part of trade.

22. —Where, on or after the 1st day of January, 1976, any change takes place whereby a part of a trade becomes transferred to any person—

(a) the amount receivable from the sale in the standard year in relation to the specified trade of goods manufactured in the State, and

(b) the number of employment contributions payable in respect of all employed contributors engaged directly or indirectly in the manufacture of goods in the State in the standard year in relation to the specified trade,

shall, as respects any relevant period in which, or prior to which, the change occurs, be apportioned for the purposes of paragraph (c) and (d) of section 24, and every such apportionment shall be made in such manner as the Revenue Commissioners consider just, having regard to all the circumstances.

Corresponding part of standard year.

23. —Where a 1977 period is less than twelve months, the corresponding part of the standard year in relation to a specified trade is the period which begins twelve months before the date on which that 1977 period begins and which ends twelve months before the date on which that 1977 period ends.

Rate of corporation tax for certain manufacturing companies.

24. —Where a company which carried on a trade on the 31st day of December, 1976, claims and proves as respects a 1977 period—

(a) that it carries on a specified trade,

(b) that its income as computed for the purposes of corporation tax from the specified trade for the accounting period which coincides with or includes the 1977 period is not less than 95 per cent. of the total amount of its income as so computed for that accounting period,

(c) that the volume of sales (being the amount determined in accordance with section 25) by the company in the 1977 period of goods manufactured in the State, and sold, in the course of the specified trade is not less than 105 per cent. of the amount receivable from the sale, in the standard year in relation to that trade, or, where the 1977 period is less than twelve months, in the corresponding part of the standard year in relation to that trade, of goods manufactured in the State in the course of that trade, and

(d) that the number of employment contributions payable in respect of all employed contributors engaged directly or indirectly in the manufacture of goods in the State in the course of the specified trade of the company in the 1977 period is not less than 103 per cent. of the number of employment contributions payable in respect of all employed contributors engaged directly or indirectly in the manufacture of goods in the State in the course of that trade, in the standard year in relation to that trade, or, where the 1977 period is less than twelve months, in the corresponding part of the standard year in relation to that trade,

the corporation tax charged on the income of the company for the accounting period which coincides with or includes the 1977 period shall, notwithstanding the provisions of sections 1 and 79 of the Corporation Tax Act, 1976 , be calculated as if the rate of corporation tax for the financial year 1977 were 25 per cent. and for this purpose the income of the company for that accounting period shall be its income for that period as defined in section 28 of the Corporation Tax Act, 1976 , for the purposes of that section.

Determination of volume of sales.

25. —For the purposes of section 24 (c) the volume of sales by a company in the 1977 period of goods manufactured in the State, and sold, in the course of a specified trade carried on by it shall be the amount which would have been receivable from the sale of those goods if the company and the buyer of the goods were independent parties dealing at arm's length and the goods were sold at the average of the prices at which they could have been sold in the course of that trade in the standard year in relation to that trade, or, where the 1977 period is less than twelve months, in the corresponding part of the standard year in relation to that trade.

Succession to trade.

26. —Where a company (referred to subsequently in this section as “the successor company”) which did not carry on a trade on the 31st day of December, 1976, succeeds to a trade or part of a trade which was carried on by another company on that date, the successor company shall, for the purposes of this Chapter, be deemed to have carried on a trade on that date.

Exclusion of duties and value-added tax.

27. —(1) For the purposes of this Chapter, except where subsection (2) applies, the amount receivable by a person from the sale of goods in any period—

(a) shall be deemed to be reduced by the amount of any duty paid or payable by the person in respect of the goods or the materials used in their manufacture, and

(b) shall not include any amount in respect of value-added tax chargeable on the sale of the goods.

(2) For the purposes of section 25 the average of the prices at which goods could have been sold by a company—

(a) shall be the average of such prices determined after excluding from those prices any amount included therein in respect of any duties which were paid, or would have been payable, by the company in respect of the goods or the materials used in their manufacture, and

(b) shall not include any amount in respect of value-added tax which would have been chargeable on the sale of the goods.

Transactions between associated persons.

28. —(1) Where a company making a claim under this Chapter (referred to subsequently in this subsection as “the buyer”) buys goods from another person (referred to subsequently in this subsection as “the seller”) and—

(a) the seller has control over the buyer or, the seller being a body corporate or partnership, the buyer has control over the seller or some other person has control over both the seller and the buyer, and

(b) the goods are sold at a price less than the price which they might have been expected to fetch if the parties to the transaction had been independent parties dealing at arm's length,

then the income or losses of the buyer and the seller shall be computed, for any purpose of the Tax Acts, as if the goods had been sold by the seller to the buyer for the price which they would have fetched if the transaction had been a transaction between independent persons dealing as aforesaid.

(2) Where a company making a claim under this Chapter (referred to subsequently in this subsection as “the seller”) sells goods to another person (referred to subsequently in this subsection as “the buyer”) and—

(a) the buyer has control over the seller or, the buyer being a body corporate or partnership, the seller has control over the buyer or some other person has control over both the seller and the buyer, and

(b) the goods are sold at a price greater than the price which they might have been expected to fetch if the parties to the transaction had been independent parties dealing at arm's length,

then, for any purpose of the Tax Acts (including this Chapter), any amount receivable from the sale of the goods and the income or losses of the buyer and the seller shall be computed as if the goods had been sold by the seller to the buyer for the price which they would have fetched if the transaction had been a transaction between independent persons dealing as aforesaid.

(3) In this section “control” has the meaning assigned to it by section 158 of the Corporation Tax Act, 1976 .

(4) The inspector may by notice in writing require a company carrying on a specified trade to furnish him with such information or particulars as may be necessary for the purposes of this section, and section 24 shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this section.

Separate accounting periods for small companies, etc.

29. —(1) Where for an accounting period—

(a) corporation tax is charged at the rate of 25 per cent. on any part of a company's income, and

(b) the accounting period falls partly in the financial year 1977 and partly in the financial year 1978,

the two parts of the accounting period shall be treated, for the purposes of sections 28 , 182 and 184 of the Corporation Tax Act, 1976 , as if they were separate accounting periods.

(2) Where, under subsection (1), a part of an accounting period is treated as a separate accounting period, the corporation tax charged for the part which is so treated shall, for the purposes of the said section 184, be taken to be the corporation tax which would be charged if that part were a separate accounting period.

(3) Where for an accounting period corporation tax is charged at the rate of 25 per cent. on all or part of a company's income—

(a) the provisions of section 28 of the Corporation Tax Act, 1976 , shall not have effect for the 1977 period which coincides with, or is included in, that accounting period, and

(b) sections 182 (3) and 184 (3) of the said Act shall have effect for the 1977 period which coincides with, or is included in, that accounting period as if the standard rate for the years 1976-77 and 1977-78 were 25 per cent.

Exclusion of mining and construction operations.

30. —Section 24 shall not apply in relation to corporation tax charged on the income of a company which carries on a trade consisting wholly or partly of—

(a) any mining operations for the purpose of obtaining, whether by underground or surface working, any scheduled mineral, mineral compound or mineral substance, within the meaning of section 2 of the Minerals Development Act, 1940 , or

(b) any construction operations within the meaning of section 17 of the Finance Act, 1970 (inserted by the Finance Act, 1976 ).

Application of section 63 (production of documents and records) of Corporation Tax Act, 1976.

31. Section 63 of the Corporation Tax Act, 1976 , shall, with any necessary modifications, apply for the purposes of this Chapter as it applies for the purposes of Part IV of the said Act.

Appeals.

32. —An appeal to the Appeal Commissioners shall lie on any question arising under this Chapter in like manner as an appeal would lie against an assessment to corporation tax and the provisions of the Tax Acts relating to appeals shall apply and have effect accordingly.