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6 1967

INCOME TAX ACT, 1967

Chapter IV

Profits from Export of Certain Goods

Definitions generally.

398. —In this Chapter—

basis period” means the period on the profits or gains of which income tax in respect of a company's trade is finally computed under Case I of Schedule D for the year of claim;

company” means (save for the purposes of the proviso to section 399 (1)) a body corporate which in the course of its trade exports goods out of the State.

Meaning of “goods”.

399. —(1) In this Chapter, “goods” means goods manufactured within the State by the person who exports them or some of them and who in relation to the relevant basis period is the company claiming relief under this Chapter:

Provided that where there are two companies one of which manufactures goods and the other of which exports them and where one of the companies holds more than 90 per cent. of the ordinary shares in the other company or where 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 by one of the companies shall, when exported by the other company, be deemed to be manufactured by that other company.

(2) The definition of “goods” contained in subsection (1) shall include—

(a) fish produced within the State on a fish farm; and

(b) cultivated mushrooms, cultivated within the State,

and, in a case in which books or greeting cards are printed within the State otherwise than by their publisher and they or some of them are exported by their publisher (not being a case to which the proviso to subsection (1) applies), the books or greeting cards, as the case may be, shall be regarded, for the purposes of subsection (1), as having been manufactured within the State by their publisher.

(3) (a) The definition of “goods” contained in subsection (1) shall include goods manufactured within the State which do not come within that definition and which are exported by the person who in relation to the relevant basis period is the company claiming relief under this Chapter where the selling by such person of the goods so exported is selling by wholesale.

(b) “Selling by wholesale” in paragraph (a) means selling goods of any class to a person who carries on a business of selling goods of that class or who uses goods of that class for the purposes of a trade or undertaking carried on by him.

Ship building and repair.

400. —(1) In the case of a company carrying on the trade of building or repairing ships, the following provisions shall apply for the purposes of relief from income tax under this Chapter:

(a) repairs carried out within the State to a ship shall be regarded as the manufacture within the State of goods and, to the extent to which any such repairs have been carried out within the State to a ship which is wholly owned by persons who are not ordinarily resident in the State, the ship shall be regarded as goods which are manufactured within the State and exported by the person who manufactures them and any amount receivable in payment for repairs carried out within the State to a ship shall be regarded as an amount receivable from the sale of goods;

(b) where, as respects any year of assessment, the company, by notice in writing given to the inspector within twelve months after the end of that year, so elects, this Chapter shall apply in the case of that year—

(i) as if all ships built by the company within the State had been exported by the company,

(ii) as if all ships to which repairs were carried out by the company within the State were, to the extent of such repairs, goods exported by the company, and

(iii) as if amounts receivable by the company in payment for the building within the State or of the repair within the State of ships were amounts receivable from the sale of goods exported by the company out of the State.

(2) In subsection (1) (a) (b) any reference to repair or building includes a reference to repair or building effected at any time.

Goods exported by the Pigs and Bacon Commission and An Bord Bainne.

401. —(1) Where, whether before or after the passing of this Act—

(a) a company, in compliance with a requirement under section 23 of the Pigs and Bacon (Amendment) Act, 1961 , sells bacon to the Pigs and Bacon Commission, and

(b) the bacon is exported out of the State by or on behalf of the Commission,

this Chapter shall apply as if the bacon had been exported out of the State by the company, and any amount receivable by the company from the sale of the bacon to the Commission shall be deemed for the purposes of this Chapter to be an amount receivable from the sale of goods so exported.

(2) Where, whether before or after the passing of this Act—

(a) by virtue of an order under section 57 of the Dairy Produce Marketing Act, 1961 , a company which manufactures a milk product within the meaning of that Act other than butter—

(i) is totally prohibited from exporting the product, or

(ii) is prohibited from exporting the product to any specified country or countries,

(b) the product is sold by the company to An Bord Bainne (hereafter in this subsection referred to as the Board), and

(c) in a case in which paragraph (a) (i) applies, the product is exported by the Board or, in a case in which paragraph (a) (ii) applies, the product is exported by the Board to the specified country or any of the specified countries, this Chapter shall apply as if the product had been exported out of the State by the company, and any amount receivable by the company from the sale of the product to the Board shall be deemed for the purposes of this Chapter to be an amount receivable from the sale of goods so exported.

(3) For the purposes of subsection (2), exportation shall be deemed not to be prohibited unless the Minister for Agriculture and Fisheries certifies that he is not prepared to license it.

Year of claim.

402. —In this Chapter “year of claim” means each of ten consecutive years of assessment of which the first is such one of the three years of assessment commencing on the 6th day of April, 1957, the 6th day of April, 1958, and the 6th day of April, 1959, respectively, as elected by the company or, in default of election, the year commencing on the 6th day of April, 1959, but, in any case in which the standard period is the period of one year ending on the 30th day of September, 1956, the year of assessment commencing on the 6th day of April, 1957, shall not be a year of claim if the basis period in relation thereto commenced on a day prior to the 1st day of October, 1955:

Provided that—

(a) in relation to a company which exports goods on or after the 6th day of April, 1960, and has not exported goods before that date, “year of claim” means each of ten consecutive years of assessment of which the first is either the earliest year of assessment for which income tax under Case I of Schedule D in respect of the company's trade is finally computed on the profits or gains of a period in which the company exports goods or the next succeeding year of assessment, as elected by the company, or, in default of election, the said succeeding year of assessment, but the year 1980-81 or any subsequent year of assessment shall in no case be a year of claim, and

(b) in relation to a company which—

(i) exports goods,

(ii) is not a company referred to in paragraph (a) of this proviso,

(iii) has not made and would not have been entitled to make a claim under subsections (1) to (4) of section 404 in respect of the year 1959-60 or any earlier year of assessment, and

(iv) would not, but for section 399 (3), be entitled to make a claim under subsections (1) to (4) of section 404,

year of claim” means each of ten consecutive years of assessment of which the first is either the year 1960-61 or the year 1961-62, as elected by the company, or, in default of election, the year 1961-62.

Standard period.

403. —The standard period in relation to a company's trade shall, for the purposes of this Chapter, be the period of one year ending on the 30th day of September, 1956, or, if so elected by the company, the period of one year ending on the 30th day of September, 1955, and that standard period shall be applicable in relation to the trade whether or not, during the whole or part of that standard period, the trade was carried on by a person other than the company by which it is carried on in the year of claim or separate parts of the trade were carried on by different persons, but that standard period shall not be applicable where the trade was not in existence before the end of that standard period.

Basis of relief from tax.

404. —(1) Where a company claims and proves as respects any year of claim—

(a) that, during the standard period in relation to the trade, goods were, in the course of the trade, exported out of the State,

(b) that, during the basis period, goods were, in the course of the trade, exported out of the State, and

(c) that the total amount receivable from the sale of the last-mentioned goods was in excess of the total amount receivable from the sale of the goods exported during the standard period,

income tax payable by the company for the year of claim, so far as it is referable to the profit attributable to the said excess, shall be reduced to nil.

(2) Subject to subsection (5), “the profit attributable to the said excess” shall, for the purposes of subsection (1), be taken to be such sum as bears to the amount of the company's profits for the year of claim, computed in accordance with this Act, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount of the said excess bears to the total amount receivable by the company from such sale in the basis period.

(3) Where a company claims and proves as respects any year of claim—

(a) that, during the standard period in relation to the trade, no goods were, in the course of the trade, exported out of the State or that the standard period is not applicable, and

(b) that, during the basis period, goods were, in the course of the trade, exported out of the State,

income tax payable by the company for the year of claim, so far as it is referable to the profit on the sale of the goods so exported shall be reduced to nil.

(4) Subject to subsection (5), “the profit on the sale of the goods so exported” shall, for the purposes of subsection (3), be taken to be such sum as bears to the amount of the company's profits for the year of claim, computed in accordance with this Act, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount receivable in the basis period from the sale of goods exported bears to the total amount receivable by the company from the sale of goods (whether exported or not) in the basis period.

(5) In a case in which the preceding provisions of this section apply, and the export out of the State in the relevant basis period consisted of or included goods with respect to which section 399 (3) provides for the inclusion thereof in the definition of “goods”, this Chapter shall have effect subject to the insertion, in subsections (2) and (4), of “and of merchandise (whether exported or not) other than such goods” after “goods (whether exported or not)” wherever the latter words occur.

(6) In relation to a company which has obtained relief under subsection (1) or (3), this section shall apply as respects the five consecutive years of assessment the first of which is the year of assessment immediately following the company's last year of claim as if—

(a) each of those years were a year of claim, and

(b) for “shall be reduced to nil” in subsections (1) and (3) there were substituted—

(i) in the case of the first of those years, “shall be reduced by 80 per cent.”,

(ii) in the case of the second of those years, “shall be reduced by 65 per cent.”,

(iii) in the case of the third of those years, “shall be reduced by 50 per cent.”,

(iv) in the case of the fourth of those years, “shall be reduced by 35 per cent”, and

(v) in the case of the fifth of those years, “shall be reduced by 15 per cent.”.

(7) Where, apart from the provisions of this subsection and subsection (8), a company is entitled to claim relief under this Chapter, by virtue of subsection (6), in respect of the year 1974-75 or any earlier year of assessment, the company may, in lieu of such relief, claim relief under subsection (1) or subsection (3) as if that year of assessment were a year of claim within the meaning of section 402.

(8) Where a company has obtained relief under this Chapter by virtue of subsection (7) and is subsequently entitled to relief under subsection (6), the last-mentioned relief shall be granted as if the last year of assessment in respect of which relief is due by virtue of subsection (7) was the company's last year of claim within the meaning of section 402:

Provided that no relief shall be given in respect of any year of assessment after the fourteenth year of assessment after the first year of claim or in respect of any year of assessment after the year 1979-80.

(9) In computing, for the purpose of assessment to income tax, the amount of the profits or gains from a company's trade, any corporation profits tax which, by virtue of section 13 of the Finance (Miscellaneous Provisions) Act, 1956 , is not payable, shall be deemed to have been paid.

Alternative relief on total exports.

405. —(1) In this section “year of claim” has the same meaning as in section 402, with the substitution of “five” for “ten” where it first occurs, and the omission of the proviso.

(2) (a) Income tax payable by a company for a year of claim other than the year of assessment commencing on the 6th day of April, 1957, so far as such income tax is referable to profit on the sale of goods exported out of the State may, notwithstanding anything contained in section 404, be reduced by 25 per cent., but such reduction shall be in substitution for and not in addition to any reduction of income tax, under section 404, for the year of claim.

(b) For the purposes of this subsection “profit on the sale of goods exported out of the State” shall be taken to be such sum as bears to the amount of the company's profits for the year of claim, computed in accordance with this Act, which is attributable to the sale of goods (whether exported or not), the same proportion as the amount receivable in the basis period from the sale of goods exported bears to the total amount receivable by the company from the sale of goods (whether exported or not) in the basis period.

(3) In a case in which the provisions of this section apply, and the export out of the State in the relevant basis period consisted of or included goods with respect to which section 399 (3) provides for the inclusion thereof in the definition of “goods”, this Chapter shall have effect subject to the insertion, in subsection (2) (b) of “and of merchandise (whether exported or not) other than such goods” after “goods (whether exported or not)” wherever the latter words occur.

(4) Subsection (2) shall apply to each of the five consecutive years of assessment, the first of which is the year of assessment immediately following the company's last year of claim for the purposes of that subsection as if—

(a) each of those years were a year of claim, and

(b) for “reduced by 25 per cent.” in subsection (2) (a) there were substituted—

(i) in the case of the first of those years, “reduced by 20 per cent.”,

(ii) in the case of the second of those years, “reduced by 15 per cent.”,

(iii) in the case of the third of those years, “reduced by 10 per cent.”,

(iv) in the case of the fourth and fifth of those years, “reduced by 5 per cent.”.

Certain manufacturing services.

406. —(1) In the case of a body corporate carrying on a trade which consists of or includes the rendering to another person of services by way of subjecting commodities or materials belonging to that person to any process of manufacturing, the following provisions shall, if the body corporate so elects, apply for the purposes of relief from income tax under this Chapter:

(a) the body corporate shall be regarded as being a company where it would not otherwise be so regarded;

(b) the rendering in the State of such services shall be regarded as the manufacture of goods and any amount receivable in payment therefor shall be regarded as an amount receivable from the sale of goods, and

(c) where—

(i) such services are rendered to a person who is not resident in the State in relation to commodities or materials which have been imported into the State, and

(ii) after the services have been rendered, the commodities or materials, or the products or articles into which they have been converted, are exported out of the State while continuing to belong to that person,

the body corporate shall be regarded as having exported goods out of the State and any payment receivable by it for the services shall be regarded as an amount receivable from the sale of goods so exported.

(2) Any election under subsection (1) shall be made by notice in writing delivered to the inspector and shall have effect as respects every year of claim for which relief under this Chapter is, or has been, claimed by the body corporate by which it is made.

(3) The Revenue Commissioners may by notice in writing require a body corporate claiming relief from tax by virtue of subsection (1) to furnish them with such information or particulars as may be necessary for the purpose of giving effect to that subsection, and section 404 (1) shall have effect as if the matters of which proof is required thereby included the information or particulars specified in a notice under this subsection.

(4) Subsection (1) shall have effect as from the 27th day of December, 1956, and relief from tax may be given accordingly by repayment or otherwise as the Revenue Commissioners think proper:

Provided that where, before an election was made by it under this section, a body corporate has paid a dividend and the amount of income tax which it was entitled to deduct from the dividend exceeds the amount which, under section 410 (2), it would have been entitled to deduct if the election had been made before the dividend was paid, any relief from income tax which would otherwise have been allowable shall be reduced by the amount of the excess.

(5) Where for any year of assessment the income of any person consists of, or includes, a dividend in relation to which the proviso to subsection (4) has had effect, the person shall be entitled to claim such repayment, if any, of income tax and sur-tax as will reduce his total liabilities to those taxes to what those liabilities would have been if income tax had been deducted from the dividend at the rate at which it would have been deductible if subsection (1) had had effect in relation to the body corporate at the time when the dividend was paid.

Changes of proprietorship.

407. —For the purposes of section 404 (1), where, in a year of claim, there is a succession to a trade, the total amount receivable from the sale of the goods exported during the standard period shall be apportioned between the predecessor and the successor in proportion to the lengths of the respective periods in the year of claim during which they carried on the trade.

Discontinuance of trade.

408. —Where, in the year of claim, the trade is permanently discontinued, the total amount receivable from the sale of the goods exported during the standard period shall, for the purposes of section 404 (1), be deemed to be such part thereof as bears to the whole the same proportion as the period in the year of claim during which the trade was carried on bears to twelve months.

Transfer of part of trade.

409. —Where, on or after the day on which the standard period commenced, any change takes place whereby a part of a trade becomes transferred to any person, the total amount receivable from the sale of the goods exported during the standard period shall, as respects any year of claim in which, or prior to which, the change occurs, be apportioned for the purposes of section 404 (1) and every such apportionment shall be made in such manner as the Revenue Commissioners consider just, having regard to all the circumstances.

Exclusions, dividends, etc.

410. —(1) A reduction shall not be made under this Chapter—

(a) in respect of income tax which a company is, otherwise than under section 456, entitled to charge against any other person or to deduct, retain or satisfy out of any payment to any other person, or

(b) in respect of income tax payable on profits from any mining operations.

(2) Where, under section 456, a body corporate is entitled to deduct income tax from any dividend, tax shall not in any case be deducted at a rate exceeding the rate of the income tax as reduced by any relief from that tax given under this Chapter, and the provisions of section 457 shall apply accordingly, with any necessary modifications.

(3) The rate of income tax at which any repayment of income tax for any year of assessment falls to be made shall be subject to such adjustments as may be proper in cases in which relief is given under or by virtue of this Chapter.

(4) Where, by virtue of subsection (2), income tax is deducted from a dividend at a reduced rate, the amount to be included in respect of the dividend in any return for the purpose of sur-tax shall be an amount which bears the same proportion to the amount of the dividend as the rate of income tax deducted therefrom bears to the rate which would have been authorised to be deducted if this section had not been enacted.

Adjustments of certain amounts.

411. —(1) Where a company claims relief pursuant to this Chapter and it appears to the Revenue Commissioners that, in the case of goods of a particular class, the relationship between the amount receivable from the sale in any period of goods exported and the amount receivable from the sale in that period of goods not exported is affected by the payment by the company of any duty in respect of the goods or the materials used in their manufacture, the Revenue Commissioners may direct that subsection (2) or subsection (3), whichever appears to them to be appropriate, shall apply in arriving at an amount receivable from the sale in that period of such goods, and where any such direction has been given, any relief to the company by reference to the sale of goods in that period shall be computed in accordance with it.

(2) (a) An amount receivable from the sale of goods exported out of the State shall be deemed to be increased by the amount of any drawback, rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods and to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

(b) An amount receivable from the sale of goods not exported shall be deemed to be increased by the amount of any rebate or repayment of duty, being duty payable in the State, received by the company in respect of such goods.

(3) (a) An amount receivable from the sale of goods exported out of the State shall be deemed to be reduced by the amount of any duty paid in any territory outside the State by the company in respect of the import of such goods into that territory.

(b) An amount receivable from the sale of goods not exported shall be deemed to be reduced by the amount of any duty, being duty payable in the State, paid by the company in respect of such goods.

(4) The Revenue Commissioners may by notice in writing require the company to furnish them with such information or particulars as may be necessary for the purpose of giving effect to this section, and section 404 (1) shall have effect as if the matters of which proof is required by that subsection included the information or particulars specified in a notice under this subsection.

Transactions between associated persons and company succeeding to trade of another company.

412. —(1) Where a company claiming relief under this Chapter (hereafter in this subsection referred to as the buyer) buys from another person (hereafter in this subsection referred to 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 price in the transaction is less than that which might have been expected to obtain if the parties to the transaction had been independent parties dealing at arm's length,

then, the profits of the buyer which are attributable to sales shall, for the purposes of this Chapter, be computed as if the price in the transaction had been that which would have obtained if the transaction had been a transaction between independent persons dealing as aforesaid.

(2) In subsection (1) “control” has the meaning assigned to it by section 299 (6).

(3) Where a company (hereafter in this subsection referred to as the succeeding company) succeeds to a trade or a part of a trade which, on or after the 6th day of April, 1960, was carried on by another company (hereafter in this subsection referred to as the original company) and the original company has or could have made a claim to relief under this Chapter, then, relief in so far as such relief relates to the trade or the part of the trade in question, shall be granted to the succeeding company only as respects the remaining years of claim for which such relief might have been claimed by the original company if it had continued to carry on the trade or the part of the trade in question.

(4) The Revenue Commissioners may by notice in writing require the company to furnish them with such information or particulars as may be necessary for the purposes of this section, and section 404 (1) and 404 (3) shall have effect as if the matters of which proof is required by those subsections included the information or particulars specified in a notice under this subsection.

(5) Where a company claims relief under this Chapter otherwise than by virtue of the provisions of section 399 (3), the foregoing provisions of this section shall have effect only in respect of transactions and successions occurring after the 19th day of April, 1961.

Production of documents and records.

413. —(1) Upon request made to him by an authorised officer at any premises of a company claiming relief under this Chapter, any person employed by the company at the premises shall produce to the authorised officer all such invoices, accounts, books and other documents and records whatsoever relating to purchase and sale of goods by the company as may be in such person's power, possession and procurement and, on production thereof, shall permit the authorised officer to examine them and take copies thereof or extracts therefrom.

(2) If a person requested under subsection (1) does not comply with the requirements of that subsection, he shall be liable to a penalty of £50.

(3) All penalties under this section may, without prejudice to any other method of recovery, be proceeded for and recovered summarily in the same manner as in summary proceedings for recovery of any fine or penalty under any Act relating to the excise.

(4) Where, in pursuance of this section, an authorised officer requests production of any documents or records, he shall, on request, show his authorisation for the purposes of this section to the person concerned.

(5) In this section, “authorised officer” means an officer of the Revenue Commissioners authorised by them in writing for the purposes of this section.

Appeals.

414. —An appeal to the Special Commissioners shall lie on any question arising under this Chapter in like manner as an appeal would lie against an assessment to income tax, and the provisions of this Act relating to appeals shall apply and have effect accordingly.