Chapter 4

Corporation Tax

55. —(1) Section 21 of the Principal Act is hereby amended in subsection (1):

(a) in paragraph (a) by the substitution for “March, 1997, and” of “March, 1997,”, and

(b) by the substitution for paragraph (b) of the following paragraphs:

“(b) 36 per cent for that part of the financial year 1997 beginning on the 1st day of April, 1997, and ending on the 31st day of December, 1997, and

(c) 32 per cent for the financial year 1998 and each subsequent financial year.”.

(2) Schedule 6 shall have effect for the purpose of supplementing this section.

56. — Section 22 of the Principal Act is hereby amended in subsection (1)—

(a) in paragraph (a), by the substitution for subparagraphs (I) and (II) of the following subparagraphs:

“(I) as respects accounting periods ending before the 1st day of April, 1997, 30 per cent,

(II) as respects accounting periods ending on or after the 1st day of April, 1997, and before the 1st day of January, 1998, 28 per cent, and

(III) as respects accounting periods ending on or after the 1st day of January, 1998, 25 per cent.”,

and

(b) by the substitution for paragraph (b) of the following paragraph:

“(b) For the purposes of paragraph (a)—

(i) where an accounting period of a company begins before the 1st day of April, 1997, and ends on or after that day, it shall be divided into 2 parts, one beginning on the day on which the accounting period begins and ending on the 31st day of March, 1997, and the other beginning on the 1st day of April, 1997, 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, and

(ii) where an accounting period of a company, including a period treated under subparagraph (i) as an accounting period, begins before the 1st day of January, 1998, and ends on or after that day, it shall be divided into 2 parts, one beginning on the day on which the accounting period begins and ending on the 31st day of December, 1997, and the other beginning on the 1st day of January, 1998, 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.”.

57. —(1) Section 713 (3) of the Principal Act is hereby amended—

(a) by the substitution of “specified in section 21(1)” for “specified in section 21(1)(b)”, and

(b) by the substitution of “in respect of the part specified in subsection (6) of the unrelieved profits” for “in respect of the part specified in subsection (5) of the unrelieved profits”.

(2) This section shall apply as on and from the 6th day of April, 1997.

58. —(1) The Principal Act is hereby amended by the insertion, after section 219, of the following section:

“Income of credit unions.

219A.—(1) In this section ‘the Act’ means the Credit Union Act, 1997 .

(2) Income arising to a credit union which is—

(a) registered as such under the Act, or

(b) deemed to be so registered by virtue of section 5(3) of the Act,

shall, with effect from the date of the registration or the deemed registration, as the case may be, of the credit union under the Act, be exempt from corporation tax.”.

(2) Section 212 of the Principal Act is hereby repealed.

59. — Section 449 of the Principal Act is hereby amended, in subsection (1), in the definition of “relevant foreign tax”—

(a) in paragraph (c), by the deletion of “and”,

(b) in paragraph (d), by the substitution for “Schedule 24;” of “Schedule 24, and”, and

(c) by the addition, after paragraph (d), of the following paragraph:

“(e) which is not treated under Schedule 24 as reducing the amount of any income;”.

60. —The Principal Act is hereby amended as respects accounting periods ending on or after the 1st day of April, 1998, in Schedule 24—

(a) by the substitution for—

“Relief from Income Tax and Corporation Tax by Means of Credit in Respect of Foreign Tax

Interpretation

1. (1) In this Schedule, except where the context otherwise requires—”

of

“Relief from Income Tax and Corporation Tax by Means of Credit in Respect of Foreign Tax

Part 1

Interpretation

1. (1) In this Schedule, except where the context otherwise requires—”,

(b) in paragraph 1(1), by the substitution for the definition of “foreign tax” of the following definition:

“‘foreign tax’ means—

(a) in the case of any territory in relation to which arrangements have the force of law, any tax chargeable under the laws of that territory for which credit may be allowed under the arrangements, and

(b) in any other case, any tax chargeable in respect of which credit may be allowed by virtue of subparagraph (3) of paragraph 9A.”,

(c) by the insertion, after paragraph 9, of the following paragraphs:

“Part 2

Unilateral Relief

9A. (1) To the extent appearing from the following provisions of this paragraph, relief (in this paragraph referred to as ‘unilateral relief’) from corporation tax in respect of profits represented by dividends shall be given in respect of tax payable under the law of any territory other than the State by allowing that tax as a credit against corporation tax, notwithstanding that there are not for the time being in force any arrangements providing for such relief.

(2) Unilateral relief shall be such relief as would fall to be given under this Schedule if arrangements with the government of the territory in question containing the provisions in subparagraphs (3) to (5) were in force, and a reference in this Schedule to credit under arrangements shall be construed as a reference to unilateral relief.

(3) Subject to Part 1 and to subparagraph (5), credit for tax paid under the law of a territory other than the State in relation to a relevant dividend paid by a company resident in the territory to a company resident in the State shall be allowed against corporation tax attributable to the profits represented by the dividend.

(4) For the purposes of subparagraph (3)—

(a) ‘tax paid under the law of a territory other than the State in relation to a relevant dividend paid by a company’ means—

(i) tax which is directly charged on the dividend, whether by charge to tax, deduction of tax at source or otherwise, and the whole of which tax neither the company nor the recipient would have borne if the dividend had not been paid, and

(ii) tax paid in respect of its profits under the law of the territory by the company paying the dividend in so far as that tax is properly attributable to the proportion of the profits represented by the dividend,

(b) ‘relevant dividend’ means a dividend paid by a company resident in a territory other than the State to a company resident in the State which either directly or indirectly owns, or is a subsidiary of a company which directly or indirectly owns, not less than 25 per cent of the ordinary share capital of the company paying the dividend; for the purposes of this subparagraph one company is a subsidiary of another company if the other company owns, directly or indirectly, not less than 50 per cent of the ordinary share capital of the first company.

(5) Credit shall not be allowed by virtue of subparagraph (3)—

(a) for tax paid under the law of a territory where there are arrangements with the government of the territory,

(b) for any tax which is relevant foreign tax within the meaning of section 449, or

(c) for any tax in respect of which credit may be allowed under section 831.

(6) Where—

(a) unilateral relief may be given in respect of a dividend, and

(b) it appears that the assessment to corporation tax made in respect of the dividends is not made in respect of the full amount thereof, or is incorrect having regard to the credit, if any, which falls to be given by way of unilateral relief,

any such assessment may be made or amended as is necessary to ensure that the total amount of the dividend is assessed, and the proper credit, if any, is given in respect thereof.

(7) In this Schedule in its application to unilateral relief, references to tax payable or paid under the law of a territory outside the State include only references to taxes which are charged on income or capital gains and which correspond to corporation tax and capital gains tax.

Dividends Paid Between Related Companies: Relief for Irish and Third Country Taxes

9B. (1) Where a foreign company pays a dividend to an Irish company and the foreign company is related to the Irish company, then for the purpose of allowing credit under any arrangements against corporation tax in respect of the dividend, there shall, subject to Part 1, be taken into account as if it were tax payable under the law of the territory in which the foreign company is resident—

(a) any income tax or corporation tax payable in the State by the foreign company in respect of its profits, and

(b) any tax which, under the law of any other territory, is payable by the foreign company in respect of its profits.

(2) Where the foreign company has received a dividend from a third company and the third company is related to the foreign company and is connected with the Irish company, then, subject to subparagraph (4), 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 that it would be taken into account under this Schedule if the dividend had been paid by a foreign company to an Irish company and arrangements had provided for underlying tax to be taken into account.

(3) Where the third company has received a dividend from a fourth company and the fourth company is related to the third company and is connected with the Irish company, then, subject to subparagraph (4), tax payable by the fourth company shall similarly be treated for the purposes of subparagraph (2) as tax paid by the third company, and so on for successive companies each of which is related to the one before and is connected with the Irish company.

(4) Subparagraphs (2) and (3) are subject to the following limitations—

(a) no tax shall be taken into account in respect of a dividend paid by an Irish company except corporation tax payable in the State and any tax for which that company is entitled to credit under this Schedule, and

(b) no tax shall be taken into account in respect of a dividend paid by a foreign company to another such company unless it could have been taken into account under this Schedule had the other company been an Irish company.

(5) (a) In this paragraph—

‘foreign company’ means a company resident outside the State;

‘Irish company’ means a company resident in the State;

‘underlying tax’, in relation to a dividend, means tax borne by the company paying the dividend on the relevant profits (within the meaning of paragraph (8)) in so far as it is properly attributable to the proportion of the relevant profits represented by the dividend.

(b) For the purposes of this paragraph—

(i) a company is related to another company if that other company—

(I) owns directly or indirectly, or

(II) is a subsidiary of a company which owns directly or indirectly,

not less than 25 per cent of the ordinary share capital of the first-mentioned company,

(ii) one company is a subsidiary of another company if the other company owns, directly or indirectly, not less than 50 per cent of the ordinary share capital of the first-mentioned company,

and

(iii) a company is connected with another company if that other company—

(I) owns directly or indirectly, or

(II) is a subsidiary of a company which owns directly or indirectly,

not less than 10 per cent of the ordinary share capital of the first-mentioned company.”,

and

(d) in paragraph 10, by the substitution for—

“Miscellaneous

10. Credit shall not be allowed”

of

“Part 3

Miscellaneous

10. Credit shall not be allowed”.

61. —Chapter 3 of Part 15 of the Principal Act is hereby amended by the insertion after section 486 of the following section:

“Corporate donations to eligible charities.

486A.—(1) In this section—

‘authorisation’ shall be construed in accordance with subsection (2);

‘eligible charity’ means any body in the State that is the holder of an authorisation that is in force;

‘qualifying donation’ shall be construed in accordance with subsection (8).

(2) Subject to subsection (3), the Revenue Commissioners may, on application to them in such form as they may determine, or in a form to the like effect, by a body in the State, and on the furnishing by the body to the Revenue Commissioners of such information as they may reasonably require for the purpose of their functions under this section, issue to the body a document (‘an authorisation’) stating that the body is an eligible charity for the purposes of this section.

(3) An authorisation shall not be issued to a body unless it shows to the satisfaction of the Revenue Commissioners that—

(a) it is a body of persons or a trust established for charitable purposes only,

(b) the income of the body is applied for charitable purposes only,

(c) before the date of the making of the application concerned under subsection (2), it has been granted exemption from tax for the purposes of section 207 for a period of not less than 3 years,

(d) it provides such other information to the Revenue Commissioners as they may require for the purposes of their functions under this section, and

(e) it complies with such conditions, if any, as the Minister for Justice, Equality and Law Reform may, from time to time, specify for the purposes of this section.

(4) An eligible charity shall publish such information in such manner as the Minister for Finance may reasonably require, including audited accounts of the charity comprising—

(a) an income and expenditure account or a profit and loss account, as appropriate, for its most recent accounting period, and

(b) a balance sheet as at the last day of that period.

(5) Notwithstanding any obligations as to secrecy or other restriction upon disclosure of information imposed by or under any statute or otherwise, the Revenue Commissioners may make available to any person the name and address of an eligible charity.

(6) Subject to subsection (7), an authorisation shall have effect for such period, not exceeding 5 years, as the Revenue Commissioners may determine and specify therein.

(7) Where the Revenue Commissioners are satisfied that an eligible charity has ceased to comply with subsection (3) or (4), they shall, by notice in writing served by registered post on the charity, withdraw the authorisation of the charity and the withdrawal shall apply and have effect from such date, subsequent to the date of the notice, as is specified therein.

(8) For the purposes of this section, a donation to an eligible charity is a qualifying donation if—

(a) it is made by a company,

(b) it is made on or after the 6th day of April, 1998, and

(c) it satisfies the requirements of subsection (9).

(9) A donation made by a company in an accounting period of the company satisfies the requirements of this subsection if—

(a) it takes the form of the payment of one or more sums of money,

(b) it is not subject to a condition as to repayment,

(c) neither the company nor any person connected with it receives a benefit in consequence of making the donation,

(d) it is not conditional on or associated with, or part of an arrangement involving, the acquisition of property by the eligible charity, otherwise than by way of gift, from the donor company or a person connected with it,

(e) but for subsection (10)—

(i) it would not be deductible in computing for the purposes of corporation tax the profits or gains of a trade or profession, and

(ii) it would not be an expense of management deductible in computing the total profits of a company,

and

(f) it is not income to which section 792 applies.

(10) Where a company makes a qualifying donation in any accounting period and claims relief from tax by reference thereto, the amount thereof shall, for the purposes of corporation tax, be treated as—

(a) a deductible trading expense of a trade carried on by the company, or

(b) an expense of management deductible in computing the total profits of the company,

for that accounting period.

(11) A claim under this section shall be made with the return required to be delivered under section 951 for the accounting period in which the qualifying donation is made.

(12) Relief under this section shall not be given—

(a) in respect of a qualifying donation made by a company in any accounting period to an eligible charity—

(i) if the amount of the qualifying donation, or the aggregate of the amount of qualifying donations made by the company in the period, does not exceed £250, or

(ii) to the extent to which the amount of the qualifying donation, or the aggregate of the amount of qualifying donations, aforesaid, exceeds £10,000,

or

(b) to the extent to which the aggregate of the amount of all qualifying donations made by a company in any accounting period to more than one eligible charity, exceeds the lesser of—

(i) £50,000, or

(ii) 10 per cent of the profits, before account is taken of the relief under this section, of the company for the accounting period.

(13) Where a qualifying donation is made by a company in an accounting period of the company which is less than 12 months, the amounts of £10,000 and £50,000 specified in subsection (12) shall be proportionately reduced.”.

62. —(1) Chapter 3 of Part 15 of the Principal Act is hereby amended by the insertion after section 486A (inserted by section 61 ) of the following section:

“Relief for investment in renewable energy generation.

486B.—(1) In this section—

‘authorised officer’ means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section;

‘commencement date’ means the day on which section 62 of the Finance Act, 1998, comes into operation;

‘the Minister’ means the Minister for Public Enterprise;

‘new ordinary shares’ means new ordinary shares forming part of the ordinary share capital of a qualifying company which, throughout the period of five years commencing on the date such shares are issued, carry no present or future preferential right to dividends, or to a company's assets on its winding up, and no present or future preferential right to be redeemed;

‘qualifying company’ means a company which—

(a) is incorporated in the State,

(b) is resident in the State and not resident elsewhere, and

(c) exists solely for the purposes of undertaking a qualifying energy project;

‘qualifying energy project’ means a renewable energy project in respect of which the Minister has given a certificate under subsection (2) which has not been revoked under that subsection;

‘qualifying period’ means the period commencing on the commencement date and ending on the day before the third anniversary of that date;

‘relevant cost’ in relation to a qualifying energy project means the amount of the capital expenditure incurred or to be incurred by the qualifying company for the purposes of undertaking the qualifying energy project reduced by an amount equal to such part of that expenditure as—

(a) is attributable to the acquisition of, or of rights in or over, land, and

(b) has been or is to be met directly or indirectly by the State or by any person other than the qualifying company;

‘relevant deduction’ means, subject to subsections (4) and (5), a deduction of an amount equal to a relevant investment;

‘relevant investment’ means a sum of money which is—

(a) paid in the qualifying period by a company on its own behalf to a qualifying company in respect of new ordinary shares in the qualifying company and is paid by the company directly to the qualifying company,

(b) paid by the company for the purposes of enabling the qualifying company to undertake a qualifying energy project, and

(c) used by the qualifying company within 2 years of the receipt of that sum for those purposes,

but does not include a sum of money paid to the qualifying company on terms which provide that it will be repaid, and a reference to the making of a relevant investment shall be construed as a reference to the payment of such a sum to a qualifying company;

‘renewable energy project’ means a renewable energy project (including a project successful in the Third Alternative Energy Requirement Competition (AER III— 1997) initiated by the Minister) in one or more of the following categories of technology—

(a) solar power,

(b) windpower,

(c) hydropower, and

(d) biomass.

(2) (a) (i) The Minister, on the making of an application by a qualifying company, may give a certificate to the qualifying company stating, in relation to a renewable energy project to be undertaken by the company, that the renewable energy project is a qualifying energy project for the purposes of this section.

(ii) An application under this section shall be in such form, and shall contain such information, as the Minister may direct.

(b) A certificate given by the Minister under paragraph (a) shall be subject to such conditions as the Minister may consider proper and specifies in the certificate.

(c) The Minister may amend or revoke any condition (including a condition amended by virtue of this paragraph) specified in such a certificate; the Minister shall give notice in writing to the qualifying company concerned of the amendment or revocation and, on such notice being given, this section shall apply as if—

(i) a condition so amended and the amendment of which is specified in the notice was specified in the certificate, and

(ii) a condition so revoked and the revocation of which is specified in the notice was not specified in the certificate.

(d) A reference in paragraph (c) to the amendment of a condition specified in a certificate includes a reference to the addition of any matter, by way of a further condition, to the terms of the certificate.

(e) Where a company fails to comply with any of the conditions specified in a certificate issued to it under paragraph (a)—

(i) that failure shall constitute the failure of an event to happen by reason of which relief is to be withdrawn under subsection (6), and

(ii) the Minister may, by notice in writing served by registered post on the company, revoke the certificate.

(3) Subject to this section, where in an accounting period a company makes a relevant investment, it shall, on making a claim in that behalf, be given a relevant deduction from its total profits for the accounting period; but, where the amount of the relevant deduction to which the company is entitled under this section in an accounting period exceeds its profits for that accounting period, an amount equal to that excess shall be carried forward to the succeeding accounting period and the amount so carried forward shall be treated for the purposes of this section as if it were a relevant investment made in that succeeding accounting period.

(4) Where in any period of 12 months ending on the day before an anniversary of the commencement date, the amount or the aggregate amount of the relevant investments made, or treated as made, by a company, or by the company and all companies which at any time in that period would be regarded as connected with the company, exceeds £10,000,000—

(a) no relief shall be given under this section in respect of the amount of the excess, and

(b) where there is more than one relevant investment, the inspector or, on appeal, the Appeal Commissioners shall make such apportionment of the relief available as shall be just and reasonable to allocate to each relevant investment a due proportion of the relief available and, where necessary, to grant to each company concerned an amount of relief proportionate to the amount of the relevant investment or the aggregate amount of the relevant investments made by it in the period.

(5) Relief under this section shall not be given in respect of a relevant investment which is made at any time in a qualifying company if, at that time, the aggregate of the amounts of that relevant investment and all other relevant investments made in the qualifying company at or before that time exceeds an amount equal to—

(a) 50 per cent of the relevant cost of the project, or

(b) £7,500,000,

whichever is the lesser.

(6) (a) A claim to relief under this section may be allowed at any time after the time specified in paragraph (c) in respect of the payment of a sum to a qualifying company if—

(i) that payment, if it is used, within 2 years of its being paid, by the qualifying company for the purposes of a qualifying energy project, will be a relevant investment, and

(ii) all the conditions specified in this section for the giving of the relief are or will be satisfied,

but the relief shall be withdrawn if, by reason of the happening of any subsequent event including the revocation by the Minister of a certificate under subsection (2) or the failure of an event to happen which at the time the relief was given was expected to happen, the company making the claim was not entitled to the relief allowed.

(b) Where a company has made a relevant investment by means of a subscription for new ordinary shares of a qualifying company and any of those shares are disposed of at any time within 5 years after the time specified in paragraph (c), a claim to relief under this section shall not be allowed in respect of the amount subscribed for those shares, and if any such relief has been given, it shall be withdrawn.

(c) The time referred to in paragraph (a) and paragraph (b) is the time when the payment in respect of which relief is claimed has been made.

(7) A claim for relief in respect of a relevant investment in a company shall not be allowed unless it is accompanied by a certificate issued by the company in such form as the Revenue Commissioners may direct and certifying that the conditions for the relief, in so far as they apply to the company and the qualifying energy project, are or will be satisfied in relation to that relevant investment.

(8) Before issuing a certificate for the purposes of subsection (7), a qualifying company shall furnish the authorised officer with—

(a) a statement to the effect that it satisfies or will satisfy the conditions for the relief in so far as they apply in relation to the company and the qualifying energy project,

(b) a copy of the certificate, including a copy of any notice given by the Minister specifying the amendment or revocation of a condition specified in that certificate, under subsection (2) in respect of the qualifying energy project, and

(c) such other information as the Revenue Commissioners may reasonably require.

(9) A certificate to which subsection (7) relates shall not be issued—

(a) without the authority of the authorised officer, or

(b) in relation to a relevant investment in respect of which relief may not be given by virtue of subsection (5).

(10) Any statement under subsection (8) shall—

(a) contain such information as the Revenue Commissioners may reasonably require,

(b) be in such form as the Revenue Commissioners may direct, and

(c) contain a declaration that it is correct to the best of the company's knowledge and belief.

(11) Where a qualifying company has issued a certificate for the purposes of subsection (7) or furnished a statement under subsection (8) and either—

(a) the certificate or statement is false or misleading in a material respect and is so false or misleading due to fraud or neglect, or

(b) the certificate was issued in contravention of subsection (9),

then—

(i) the company shall be liable to a penalty not exceeding £500 or, in the case of fraud, not exceeding £1,000, and such penalty may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the like manner as in summary proceedings for the recovery of any fine or penalty under any Act relating to the excise, and

(ii) no relief shall be given under this section in respect of the matter to which the certificate or statement relates and, if any such relief has been given, it shall be withdrawn.

(12) A company shall not be entitled to relief in respect of a relevant investment unless the relevant investment—

(a) has been made for bona fide commercial reasons and not as part of a scheme or arrangement the main purpose or one of the main purposes of which is the avoidance of tax,

(b) has been or will be used for the purposes of undertaking a qualifying energy project, and

(c) is made at the risk of the company and neither the company nor any person who would be regarded as connected with the company is entitled to receive any payment in money or money's worth or other benefit directly or indirectly borne by or attributable to the qualifying company, other than a payment made on an arm's length basis for goods or services supplied or a payment out of the proceeds of exploiting the qualifying energy project to which the company is entitled under the terms subject to which the relevant investment is made.

(13) Where any relief has been given under this section which is subsequently found not to have been due or is to be withdrawn by virtue of subsection (6) or (11), that relief shall be withdrawn by making an assessment to corporation tax, under Case IV of Schedule D, for the accounting period or accounting periods in which relief was given and, notwithstanding anything in the Tax Acts, such an assessment may be made at any time.

(14) (a) Subject to paragraph (b), where a company is entitled to relief under this section in respect of any sum or any part of a sum, or would be so entitled on duly making a claim in that behalf, as a relevant deduction from its total profits for any accounting period, it shall not be entitled to any relief for that sum or that part of a sum, in computing its income or profits, or as a deduction from its income or profits, for any accounting period under any other provision of the Tax Acts or the Capital Gains Tax Acts.

(b) Where a company has made a relevant investment by means of a subscription for new ordinary shares of a qualifying company and none of those shares is disposed of by the company within five years of their acquisition by that company, then, the sums allowable as deductions from the consideration (‘the consideration concerned’) in the computation for the purpose of capital gains tax of the gain or loss accruing to the company on the disposal of those shares shall be determined without regard to any relief under this section which the company has obtained, or would be entitled, on duly making a claim in that behalf, to obtain, except that, where those sums exceed the consideration concerned, they shall be reduced by an amount equal to the lesser of—

(i) the amount of the relevant deduction allowed to the company under this section in respect of the subscription for those shares, and

(ii) the amount of the excess.”.

(2) This section shall come into operation on such day as the Minister for Finance appoints by order.

63. — Section 88 of the Principal Act is hereby amended in subsection (3)(b)—

(a) by the deletion of subparagraph (ii), and

(b) by the substitution of “£3,000,000” for “£1,500,000” in subparagraph (iii).

64. —(1) Section 715 of the Principal Act is hereby amended in subsection (2) by the substitution for paragraph (a) of the following paragraph:

“(a) (i) subject to subparagraphs (ii), (iii) and (iv), subsection (1) of section 710 shall apply with the necessary modifications and in particular shall apply as if there were deleted from that subsection all references to policyholders other than holders of policies referable to pension business,

(ii) where apart from this subparagraph any profits would be excluded in making the computation solely by virtue of that part being reserved for holders of policies referable to pension business, that part shall not be so excluded,

(iii) in relation to investments of any fund representing the amount of the liabilities of the company to policyholders in respect of its pension business or general annuity business, as the case may be,

(I) any increase in value of those investments (whether realised or unrealised) shall be taken into account as a receipt, and

(II) any decrease in value of those investments (whether realised or unrealised) shall be taken into account as an expense,

to the extent that the increase or decrease, as the case may be, is included in the value of those liabilities as valued by the actuary to the company, and

(iv) where the profits of an assurance company for an accounting period (in this subparagraph referred to as ‘the first accounting period’) are computed in accordance with subparagraph (iii) and the profits of the most recent preceding accounting period are not so computed, the increase or decrease in the value of investments referred to in subparagraph (iii) shall as respects the first accounting period be computed by reference to the cost of the investments at the time they were acquired by the company and such increase or decrease shall be treated as a receipt or as an expense, as the case may be.”.

(2) This section shall apply as respects an accounting period of a company ending on or after the 4th day of March, 1998.