Minerals & Petroleum Tax

Part 24

Taxation of Profits of Certain Mines and Petroleum Taxa670tion (ss. 670-696M)

Chapter 1

Taxation of profits of certain mines (ss. 670-683)

670.

Mine development allowance.

(1)In this section –

“mine” means a mine operated 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, but, in relation to capital expenditure incurred before the 6th day of April, 1960, “mine” means an underground excavation made for the purpose of getting minerals;

references to capital expenditure incurred in connection with a mine shall be construed as references to capital expenditure incurred –

(a)in the development of the mine on searching for, or on discovering and testing, mineral deposits or winning access to such deposits, or

(b)on the construction of any works which are of such a nature that when the mine has ceased to be operated they are likely to have so diminished in value that their value will be nil or almost nil,

but as excluding references to –

(i)any expenditure on the acquisition of the site of the mine or of the site of any such works or of rights in or over any such site,

(ii)any expenditure on the acquisition of, or of rights over, the deposits, or

(iii)any expenditure on works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such;

references to assets representing capital expenditure incurred in connection with a mine shall be construed as including –

(a)in relation to expenditure on searching for, discovering and testing deposits, references to any information or other results obtained from any search, exploration or enquiry on which the expenditure was incurred,

(b)references to any part of such assets, and

(c)in the case of any such assets destroyed or damaged, references to any insurance moneys or other compensation moneys in respect of such destruction or damage.

(2)Expenditure shall not for the purposes of this section be regarded as having been incurred by a person carrying on the trade of working a mine in so far as the expenditure has been or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any other person (not being a person who has carried on the trade of working that mine).

(3)Any person who carries on the trade of working a mine and who has on or after the 6th day of April, 1946, incurred any capital expenditure in connection with the mine may apply for an allowance (in this section referred to as a “mine development allowance”) in respect of that capital expenditure.

(4)Application for a mine development allowance for any chargeable period may be made to the inspector not later than 24 months after the end of that period.

(5)

(a)Subject to paragraph (b), the following provisions shall apply in relation to the amount of a mine development allowance for any chargeable period in respect of any capital expenditure incurred in connection with a mine:

(i)the inspector shall estimate to the best of his or her judgment the life (in this subsection referred to as “the estimated life”) of the deposits, but shall not estimate such life at more than 20 years;

(ii)the inspector shall then estimate the amount of the difference (in this subsection referred to as “the estimated difference”) between the capital expenditure incurred in connection with the mine and the amount which in his or her opinion the assets representing that capital expenditure are likely to be worth at the end of the estimated life;

(iii)the inspector shall, subject to this section, allow as the mine development allowance for that chargeable period an amount equal to a sum which bears to the estimated difference the same proportion as the length of that chargeable period bears to the length of the estimated life;

(iv)if capital expenditure incurred in connection with the mine was incurred during that chargeable period, then, that chargeable period shall for the purposes of subparagraph (iii) be taken to comprise so much only of that chargeable period as is subsequent to the date on which the capital expenditure was incurred.

(b)The total of the mine development allowances shall not exceed the estimated difference.

(6)A mine development allowance to any person carrying on the trade of working a mine shall be made in taxing that trade, and section 304(4) shall apply in relation to the allowance as it applies in relation to allowances to be made under Part 9.

(7)A mine development allowance shall not be made in respect of any capital expenditure incurred in connection with a mine in any case where the asset representing that capital expenditure is an asset in respect of which an allowance may be made under section 284.

(8)Where a mine development allowance for any chargeable period has been made in respect of capital expenditure incurred in connection with a mine, then, for that chargeable period section 85 shall not apply as respects any such asset.

(9)Any capital expenditure incurred on or after the 6th day of April, 1946, in connection with a mine by a person about to carry on the trade of working the mine but before commencing such trade shall be treated for the purposes of this section as if it had been incurred on the first day of the commencement of such trade.

(10)Where mine development allowances in respect of any capital expenditure incurred in connection with a mine have been made and the mine has finally ceased to be operated, the following provisions shall apply:

(a)the inspector shall review the mine development allowances;

(b)if on such review it appears that the amount of the difference (in this subsection referred to as “the difference”) between the capital expenditure incurred in connection with the mine and the amount which the assets representing that capital expenditure at such cessation were worth at such cessation exceeds the total of the mine development allowances, then, further mine development allowances equal to the excess may be made for any chargeable period (being the chargeable period in which the mine has finally ceased to be operated or any previous chargeable period), but the total of such further mine development allowances shall not amount to more than the excess and if necessary (and notwithstanding any limitation in section 865(4) on the time within which a claim for a repayment of tax is required to be made) effect may be given to this paragraph by means of repayment;

(c)if on such review it appears that the difference is less than the total of the mine development allowances, then, the deficiency or the total of the mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade of working the mine accruing immediately before such cessation.

(11)Where the person (in this subsection referred to as “the vendor”) carrying on the trade of working a mine sells to any other person (not being a person who succeeds the vendor in that trade) any asset representing capital expenditure incurred in connection with the mine and by reference to which mine development allowances have been made, the following provisions shall apply:

(a)if the total of the mine development allowances when added to the sum realised on the sale of that asset is less than that capital expenditure by any amount (in this subsection referred to as “the unexhausted allowance”), then, further mine development allowances may be granted to the vendor in respect of any chargeable period (being the chargeable period of such sale or any previous chargeable period), but the total of such further mine development allowances shall not exceed the unexhausted allowance;

(b)if the total of the mine development allowances when added to the sum realised on the sale of that asset exceeds that capital expenditure, then, the amount of such excess or the total of the mine development allowances, whichever is the less, shall be treated as a trading receipt of the trade accruing immediately before the sale.

(12)Where –

(a)mine development allowances in respect of any capital expenditure incurred in connection with a mine have been made to a person (in this subsection referred to as “the original trader”) carrying on the trade of working the mine, and

(b)another person (in this subsection referred to as “the successor”) succeeds to that trade,

mine development allowances may continue to be made in respect of that capital expenditure to the successor, but in no case shall the amount of such allowances exceed the amount to which the original trader would have been entitled if the original trader had continued to carry on that trade.

(13)Where for any chargeable period a company was entitled to relief from tax by virtue of Chapter II or Chapter III of Part XXV of the Income Tax Act, 1967, then, for the purposes of subsections (5) and (10) to (12), there shall be deemed to have been made for that chargeable period in respect of any expenditure the full mine development allowance which on due claim could have been made for that chargeable period in respect of that expenditure, unless that allowance has in fact been made.

(14)A person aggrieved by a decision of the inspector on an application by that person for an allowance under this section may appeal the decision to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of the decision.

671.

Marginal coal mine allowance.

(1)In this section, “marginal coal mine” means a coal mine in the State being worked for the purpose of the production of coal and in respect of which the Minister for Communications, Energy and Natural Resources gives a certificate stating that that Minister is satisfied that the profits derived or to be derived from the working of that mine are such that, if tax is to be charged on those profits in accordance with the Income Tax Acts, other than this section, the mine is unlikely to continue to be worked.

(2)The Minister for Finance, after consultation with the Minister for Communications, Energy and Natural Resources, may direct in respect of a marginal coal mine that for any particular year of assessment the tax chargeable on the profits of that mine shall be reduced to such amount (including nil) as may be specified by the Minister for Finance.

(3)Where a person is carrying on the trade of working a coal mine in respect of which the Minister for Finance gives a direction under subsection (2) in respect of a year of assessment, an allowance shall be made as a deduction in charging the profits of that trade to tax for that year of assessment of such amount as will ensure that the tax charged in respect of the profits of that trade shall equal the amount specified by that Minister.

(4)This section shall apply for corporation tax as it applies for income tax, and references to the Income Tax Acts, to years of assessment and to a deduction in charging the profits of a trade shall apply as if they were or included respectively references to the Corporation Tax Acts, to accounting periods and to a deduction made in computing the trading income for corporation tax.

672.

Interpretation (sections 672 to 683).

(1)In this section and in sections 673 to 683, except where otherwise provided or the context otherwise requires –

“development expenditure” means capital expenditure –
(a)on the development of a qualifying mine, or
(b)on the construction of any works in connection with a qualifying mine which are of such a nature that, when the mine ceases to be operated, they are likely to have so diminished in value that their value will be nil or almost nil
and includes interest on money borrowed to meet such capital expenditure, but does not include expenditure on –
(i)the acquisition of the site of the mine or the site of any such works or of rights in or over any such site
(ii)the acquisition of a scheduled mineral asset, or
(iii)works constructed wholly or mainly for subjecting the raw product of the mine to any process except a process designed for preparing the raw product for use as such;

“exploration expenditure” means capital expenditure on searching in the State for deposits of scheduled minerals or on testing such deposits or winning access to such deposits, and includes capital expenditure on systematic searching for areas containing scheduled minerals and searching by drilling or other means for scheduled minerals in those areas, but does not include expenditure on operations in the course of working a qualifying mine or expenditure which is development expenditure;

“mine development allowance” has the same meaning as in section 670;

“qualifying mine” means a mine being worked for the purpose of obtaining scheduled minerals;

“scheduled mineral asset” means a deposit of scheduled minerals or land comprising such a deposit or an interest in or right over such deposit or land;

“scheduled minerals” means minerals specified in the Table to this section occurring in non-bedded deposits of such minerals.

(2)Except where provided for in sections 674 to 676, expenditure shall not be regarded for the purposes of this section and sections 673 to 683 as having been incurred by a person carrying on the trade of working a qualifying mine in so far as the expenditure has been or is to be met directly or indirectly out of moneys provided by the Oireachtas or by any other person (not being a person who has carried on the trade of working that mine).

(3)The Minister for Finance may by regulations add minerals occurring in non-bedded deposits of such minerals to the Table to this section.

(4)Every regulation made under subsection (3) shall be laid before Dáil Éireann as soon as may be after it is made and, if a resolution annulling the regulation is passed by Dáil Éireann within the next 21 days on which Dáil Éireann has sat after the regulation is laid before it, the regulation shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

Table

Scheduled Minerals

Barytes

Felspar

Serpentinous marble

Quartz rock

Soapstone

Ores of copper

Ores of gold

Ores of iron

Ores of lead

Ores of manganese

Ores of molybdenum

Ores of silver

Ores of sulphur

Ores of zinc.

 

673.

Allowance in respect of development expenditure and exploration expenditure.

(1)Subject to subsections (2) and (3), where a person carrying on the trade of working a qualifying mine incurs on or after the 6th day of April, 1974, any development expenditure or exploration expenditure and makes application under section 670 for a mine development allowance for a chargeable period in respect of such expenditure –

(a)that expenditure shall be deemed to be expenditure in respect of which that allowance may be granted, whether or not in the case of exploration expenditure a deposit of scheduled minerals is found as a result of the expenditure,

(b)the amount of such allowance for that chargeable period shall be equal to the total amount of –

(i)the exploration expenditure, and

(ii)in the case of development expenditure, the amount of the difference between that expenditure and the amount which in the opinion of the inspector the assets representing that expenditure are likely to be worth at the end of the estimated life of the qualifying mine, and

(c)in relation to a case in which this section has applied, any reference in the Tax Acts to an allowance made under section 670 shall be construed as including a reference to an allowance made under that section by virtue of this section.

(2)For the purposes of this section, no account shall be taken of exploration expenditure incurred before the 1st day of April, 1990, as a result of which a deposit of scheduled minerals is not found if the expenditure was incurred more than 10 years before the date on which the person carrying on the trade of working a qualifying mine commenced to carry on that trade.

(3)No allowance shall be made under subsection (1) in respect of expenditure incurred before the 6th day of April, 1974, whether or not such expenditure is by virtue of any provision of the Tax Acts deemed to have been incurred on or after that date.

674.

Expenditure on abortive exploration.

(1)

(a)Where a person who commences to carry on a trade of working a qualifying mine has incurred exploration expenditure and that expenditure was not incurred in connection with the qualifying mine, then, subject to paragraph (b), in taxing the trade for the chargeable period in which the person commences to carry on the trade, there shall be made an allowance of an amount equal to the amount of that expenditure.

(b)For the purposes of paragraph (a), no account shall be taken of exploration expenditure incurred before the 1st day of April, 1990, if the expenditure was incurred more than 10 years before the date on which the person commences to carry on the trade of working the qualifying mine.

(2)Where in a case referred to in subsection (1) the person concerned is a body corporate and there was or is, after all or part of the expenditure referred to in that subsection had been incurred by the body corporate, a change in ownership (within the meaning of Schedule 9) of the body corporate or of a body corporate that is a parent body or a wholly-owned subsidiary (within the meaning of section 675) of the first-mentioned body corporate, no allowance shall be made under this section in respect of any part of that expenditure incurred before the date of the change in ownership; but, in any case where part of the ordinary share capital of any body corporate is acquired by a Minister of the Government, such acquisition shall be disregarded in determining whether or not there was or is such a change in ownership.

(3)Where a person commences to carry on the trade of working a qualifying mine but has not incurred the exploration expenditure incurred in connection with that mine, no allowance shall be made under this section or by virtue of section 673 in respect of exploration expenditure incurred by that person before the date on which that person commences to carry on that trade.

(4)Subject to paragraphs 16 and 18 of Schedule 32, a person shall not be entitled to an allowance in respect of the same expenditure both under this section and under some other provision of the Tax Acts.

675.

Exploration expenditure incurred by certain bodies corporate.

(1)Subject to subsection (2), where exploration expenditure, in respect of which an allowance may be claimed by virtue of section 673 or 674, or (as respects expenditure incurred on or after the 1st day of April, 1990) by virtue of section 673 as applied by section 679, is or has been incurred by a body corporate (in this section referred to as “the exploration company”) and –

(a)another body corporate is or is deemed to be a wholly-owned subsidiary of the exploration company, or

(b)the exploration company is or is deemed to be a wholly-owned subsidiary of another body corporate,

then, the expenditure or so much of it as the exploration company specifies –

(i)in the case referred to in paragraph (a), may at the election of the exploration company be deemed to have been incurred by such other body corporate (being a body corporate which is or is deemed to be a wholly-owned subsidiary of the exploration company) as the exploration company specifies,

(ii)in the case referred to in paragraph (b), may at the election of the exploration company be deemed to have been incurred by the body corporate (in this paragraph referred to as “the parent body”) of which the exploration company was, at the time the expenditure was incurred, a wholly-owned subsidiary or by such other body corporate (being a body corporate which is or is deemed to be a wholly-owned subsidiary of the parent body) as the exploration company specifies,

and, in a case where that expenditure was incurred on a date before the incorporation of the body corporate so specified, sections 672 to 683 shall apply in relation to the granting of any allowance in respect of that expenditure as if that body corporate had been in existence at the time the expenditure was incurred and had incurred the expenditure at that time.

(2)

(a)The same expenditure shall not be taken into account in relation to more than one trade by virtue of this section.

(b)Subject to paragraphs 16 and 18 of Schedule 32, an allowance shall not be granted in respect of the same expenditure both by virtue of this section and under some other provision of the Tax Acts.

(3)A body corporate shall for the purposes of subsection (1) be deemed to be a wholly-owned subsidiary of another body corporate if and so long as all of its ordinary share capital is owned by that other body corporate, whether directly or through another body corporate or other bodies corporate or partly directly and partly through another body corporate or other bodies corporate; but, where part of the ordinary share capital of any body corporate is held by a Minister of the Government and the remainder of the ordinary share capital of that body corporate is held by another body corporate, the first-mentioned body corporate shall for the purposes of subsection (1) be deemed to be a wholly owned subsidiary of the last-mentioned body corporate.

(4)Subsections (5) to (10) of section 9 shall apply for the purpose of determining the amount of ordinary share capital held in a body corporate through other bodies corporate.

676.

Expenditure incurred by person not engaged in trade of mining.

(1)Where –

(a)a person incurs exploration expenditure which results in the finding of a deposit of scheduled minerals, and

(b)without having carried on any trade which consists of or includes the working of that deposit and without any allowance or deduction under or by virtue of sections 672 to 683 having been made to the person in respect of that expenditure, the person sells any assets representing that expenditure to another person,

then, if that other person carries on such a trade in connection with that deposit, that other person shall for the purposes of sections 672 to 683 be deemed to have incurred, for the purposes of the trade and in connection with the deposit, exploration expenditure equal to the lesser of –

(i)the amount of the exploration expenditure represented by the assets, and

(ii)the price paid by that other person for the assets,

and that expenditure shall be deemed to have been incurred by that other person on the date on which that other person commences to carry on that trade.

(2)A person who by virtue of subsection (1) is deemed to have incurred an amount of exploration expenditure shall be deemed not to have incurred that amount of expenditure unless the working of the deposit results in the production of scheduled minerals in reasonable commercial quantities.

(3)Subject to paragraphs 16 and 18 of Schedule 32, a deduction or allowance in respect of the same expenditure shall not be made both under this section and under some other provision of the Tax Acts.

(4)Section 677 shall not apply to expenditure in respect of which an allowance is made by virtue of this section.

677.

Investment allowance in respect of exploration expenditure.

(1)Where a person carrying on the trade of working a qualifying mine incurs on or after the 6th day of April, 1974, and before 1 January 2011, exploration expenditure in relation to which section 673 applies, there shall, in addition to any mine development allowance made in respect of such expenditure, be made to the person in taxing the trade for the chargeable period for which such mine development allowance is made an allowance (which shall be known as an “exploration investment allowance”) equal to 20 per cent of such expenditure, and section 670(6) shall apply to an exploration investment allowance as it applies to a mine development allowance.

(2)

(a)No allowance shall be made under this section in respect of exploration expenditure –

(i)incurred before the 6th day of April, 1974, whether or not such expenditure is by virtue of any provision of the Tax Acts deemed to have been incurred on or after that date, or

(ii)which is deemed to be incurred by a person other than the person who incurred the expenditure.

(b)Paragraph (a) shall not apply in respect of expenditure deemed under section 675 to have been incurred by a body corporate other than the body corporate which incurred the expenditure.

678.

Allowance for machinery and plant.

(1)Where on or after the 6th day of April, 1974, new machinery or new plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) is provided for use for the purposes of the trade of working a qualifying mine, that machinery or plant shall, if it is not qualifying machinery or plant, be deemed for the purpose of section 285 to be qualifying machinery or plant.

(2)Where on or after the 6th day of April, 1974, and before 1 January 2011, a person carrying on the trade of working a qualifying mine incurs capital expenditure on the provision of new machinery or new plant (other than vehicles suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles) for the purposes of that trade, there shall be made to the person for the chargeable period related to the expenditure an allowance equal to 20 per cent of the expenditure, and such allowance shall be made in taxing the trade.

(3)For the purposes of ascertaining the amount of any allowance to be made to any person under section 284 in respect of expenditure incurred during a chargeable period on any qualifying machinery or plant, no account shall be taken of an allowance under subsection (2) in respect of that expenditure, and in section 284(4) “the allowances on that account” and “the allowances” where it occurs before “exceed” shall each be construed as not including a reference to any allowance made under subsection (2) to the person by whom the trade of working a qualifying mine is carried on.

(4)Where an allowance under subsection (2) has been made to any person in respect of expenditure incurred on the provision of qualifying machinery or plant and the machinery or plant is sold by that person without the machinery or plant having been used by that person for the purposes of the trade of working a qualifying mine or before the expiration of the period of 2 years from the day on which the machinery or plant began to be so used, the allowance shall be withdrawn and assessments shall be made or amended as may be necessary for or in consequence of the withdrawal of the allowance.

(5)For the purposes of this section –

(a)the day on which any expenditure is incurred shall be taken to be the day when the sum in question becomes payable,

(b)expenditure shall not be regarded as having been incurred by a person in so far as it has been or is to be met directly or indirectly by the State, by any board established by statute or by any public or local authority,

(c)any expenditure incurred for the purposes of a trade by a person about to carry on the trade shall be treated as if that expenditure had been incurred by that person on the first day on which that person carries on the trade,

(d) capital expenditure shall not include any expenditure which is allowed to be deducted in computing for the purposes of tax the profits or gains of a trade carried on by the person incurring the expenditure, and

(e)subsections (2) and (3) of section 306 shall apply in determining the chargeable period (being a year of assessment) for which an allowance is to be made under this section.

(6)For the purposes of the Income Tax Acts, any claim by a person for an allowance under this section in taxing the person’s trade shall be included in the annual statement required to be delivered under those Acts of the profits or gains of the person’s trade and shall be accompanied by a certificate signed by the claimant (which shall be deemed to form part of the claim) stating that the expenditure was incurred on the provision of qualifying machinery or plant and giving such particulars as show that the allowance is to be made.

(7)Section 304(4) shall apply in relation to an allowance under subsection (2) as it applies in relation to allowances to be made under Part 9.

679.

Exploration expenditure.

(1)

(a)In this section –

“exploration company” means a company, the business of which for the time being consists primarily of exploring for scheduled minerals;

“exploring for scheduled minerals” means searching in the State for deposits of scheduled minerals or testing such deposits or winning access to such deposits, and includes the systematic searching for areas containing scheduled minerals and searching by drilling or other means for scheduled minerals within those areas, but does not include operations which are operations in the course of developing or working a qualifying mine.

(b)This section shall apply as respects expenditure incurred on or after the 1st day of April, 1990.

(2)Subject to subsections (3) to (5), for as long as a company –

(a)is an exploration company,

(b)does not carry on a trade of working a qualifying mine, and

(c)incurs capital expenditure (including such expenditure incurred on the provision of plant and machinery) for the purposes of exploring for scheduled minerals,

the company shall be deemed for the purposes of sections 673, 674(3), 677 and 678 and the other provisions of the Tax Acts, apart from section 672, subsections (1), (2) and (4) of section 674 and sections 675, 676, 680, 681, 682 and 683 –

(i)to be carrying on a trade of working a qualifying mine,

(ii)to come within the charge to corporation tax in respect of that trade when it first incurs the capital expenditure referred to in paragraph (c), and

(iii)to incur for the purposes of that trade that expenditure incurred on the provision of plant and machinery,

so that all allowances or charges to be made for an accounting period by virtue of this subsection and section 673, 677 or 678 shall be given effect by treating the amount of any allowance as a trading expense of that trade in the period and by treating the amount on which any such charge is to be made as a trading receipt of that trade in the period.

(3)Where by virtue of subsection (2) a company is to be treated as incurring a loss in a trade in an accounting period, the company –

(a)shall be entitled to relief in respect of the loss under subsections (1) to (3) of section 396 and subsections (1) and (2) of section 397 as if for “trading income from the trade” or “trading income”, wherever occurring in sections 396 and 397, there were substituted “profits (of whatever description)”, and

(b)subject to subsection (4)(b)(ii), shall not otherwise be entitled to relief in respect of the loss or to surrender relief under section 420(1) in respect of the loss.

(4)

(a)Any asset representing exploration expenditure in respect of which an allowance or deduction has been made to a company by virtue of subsection (2) and section 673 shall for the purposes of section 670(11) be treated as an asset representing capital expenditure incurred in connection with the mine which the company is deemed to be working by virtue of subsection (2), and the company shall not cease to be deemed to be carrying on the trade of working that mine, so as to be within the charge to corporation tax in respect of that trade, before any sale of such an asset in the event of such a sale.

(b)Subject to paragraph (c), where a company begins at any time (in this paragraph and in paragraph (c) referred to as “the relevant time”) to carry on a trade of working a qualifying mine and accordingly ceases to be deemed to carry on such a trade, the company shall be treated as carrying on the same trade before and after that time for the purposes of –

(i)any allowance, charge or trade receipt treated as arising by reference to any capital expenditure incurred before the relevant time, and

(ii)relief, other than by virtue of subsection (3), under section 396(1) for any losses arising before the relevant time, in so far as relief has not already been given for those losses by virtue of this section.

(c)Paragraph (b) shall not apply where there is a change in the ownership of the company within a period of –

(i)12 months ending at the relevant time, or

(ii)24 months beginning at the relevant time.

(d)Schedule 9 shall apply for the purposes of supplementing this subsection.

(5)

(a)Notwithstanding any other provision of the Tax Acts, where an allowance or deduction has been given by virtue of this section in respect of any expenditure, no other allowance or deduction shall be given by virtue of any provision of the Tax Acts, including this section, in respect of that expenditure.

(b)Paragraph (b) of section 261 shall apply to a company for as long as it is deemed by virtue of subsection (2) to be carrying on a trade of working a qualifying mine as if “who is not a company within the charge to corporation tax in respect of the payment” were deleted from that paragraph.

680.

Annual allowance for mineral depletion.

(1)Where a person carrying on the trade of working a qualifying mine at any time incurs after the 31st day of March, 1974, capital expenditure on the acquisition of a scheduled mineral asset entitling such person to work deposits of scheduled minerals and in connection with that trade commences to work those deposits, such person shall be entitled to mine development allowances under section 670 in respect of that capital expenditure to the extent that such person would have been entitled to such allowances if that capital expenditure had been capital expenditure incurred in the development of the mine, but section 673 shall not apply in respect of any such expenditure.

(2)Where a person who commences to carry on the trade of working a qualifying mine on or after the 6th day of April, 1974, incurred capital expenditure before that time on the acquisition of a scheduled mineral asset in connection with that mine, such person shall for the purposes of this section be deemed to have incurred that expenditure on the day on which such person commences to carry on that trade, and subsection (1) shall apply accordingly.

681.

Allowance for mine rehabilitation expenditure.

(1)

(a)In this section –

“integrated pollution control licence” means a licence granted under section 83 of the Environmental Protection Agency Act, 1992;

“mine rehabilitation fund”, in relation to a qualifying mine, means a fund –

(i)which consists of amounts paid by a person carrying on the trade of working a qualifying mine to another person (in this section referred to as “the fund holder”) not connected with the first-mentioned person,

(ii)which is obliged to be maintained under the terms –

(I)of a State mining facility, or

(II)of any other agreement in writing to which the Minister is a party and to which the State mining facility is subject,

(iii)the sole purpose of which is to have available at the time a qualifying mine ceases to be worked such amount as is specified in a certificate given by the Minister under subsection (2) as being the amount which in the Minister’s opinion could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine, and

(iv)no part of which may be paid to the person, or a person connected with that person, who is working or has worked the qualifying mine except where –

(I)the fund holder has been authorised in writing by the Minister, and by either or both the relevant local authority and the Environmental Protection Agency, to make a payment to the person or the connected person, as the case may be, for the purposes of incurring rehabilitation expenditure in relation to the qualifying mine, or

(II)an amount may be paid to the person or the connected person, as the case may be, after a certificate of completion of rehabilitation in relation to the qualifying mine has been submitted to and approved by –

(A)the Minister, and

(B)either or both the relevant local authority and the Environmental Protection Agency;

“the Minister” means the Minister for Communications, Energy and Natural Resources;

“qualifying mine” means a mine being worked for the purpose of obtaining scheduled minerals, dolomite and dolomitic limestone, fireclay, coal, calcite and gypsum, or any of those minerals;

“rehabilitation expenditure” means expenditure incurred in connection with the rehabilitation of the site of a mine or part of a mine, being expenditure incurred by a person who has ceased to work the mine in order to comply with any condition –

(i)of a State mining facility,

(ii)subject to which planning permission for development consisting of the mining and working of minerals was granted, or

(iii)subject to which an integrated pollution control licence for an activity specified in the First Schedule to the Environmental Protection Agency Act, 1992, was granted;

“rehabilitation” includes landscaping and the carrying out of any activities which take place after the mine ceases to be worked and which are required by a condition subject to which planning permission for development consisting of the mining and working of minerals, or an integrated pollution control licence, was granted;

“relevant local authority”, in relation to a qualifying mine disposal, means the local authority for the purposes of the Local Government Act 2001 (as amended by the Local Government Reform Act 2014) in whose functional area the mine being disposed of is situated;

“relevant payments” means payments specified in accordance with paragraph (b)(iii) of subsection (2) in a certificate given under that subsection and which are paid at or about the time specified in the certificate;

“State mining facility”, in relation to a mine, means a State mining lease, a State mining licence or a State mining permission granted by the Minister in relation to the mine.

(b)For the purposes of this section –

(i)any reference to the site of a mine includes a reference to land used in connection with the working of the mine, and

(ii)the net cost to any person of the rehabilitation of the site of a mine shall be the excess, if any, of rehabilitation expenditure over any receipts attributable to the rehabilitation (whether for spoil or other assets removed from the site or for tipping rights or otherwise).

(c)For the purposes of this section, subsections (2) and (3) of section 306 shall apply in determining the chargeable period (being a year of assessment) for which an allowance is to be made under this section.

(2)

(a)Where in relation to a fund the Minister is of the opinion that –

(i)the matters set out in paragraphs (i), (ii) and (iv) of the definition of “mine rehabilitation fund” are satisfied, and

(ii)the sole purpose of the fund is to have available at the time a qualifying mine ceases to be worked such amount as could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine,

the Minister may give a certificate to that effect.

(b)A certificate given under paragraph (a) shall, in addition to the information specified in that paragraph, specify –

(i)the number of years, being the Minister’s opinion of the life (in this section referred to as “the estimated life”) of the mine remaining at the time the certificate is given,

(ii)the amount which in the Minister’s opinion could reasonably be expected to be necessary to meet rehabilitation expenditure in relation to the qualifying mine, and

(iii)the amounts (in this section referred to as “the scheduled payments”) required to be paid to the fund holder, and the times at which such amounts are to be paid, so as to achieve the purpose specified in paragraph (a) (ii).

(c)The Minister may, by notice in writing given to a person to whom a certificate has been given under this section, amend the certificate.

(3)

(a)An allowance equal to so much of any rehabilitation expenditure in relation to a qualifying mine as does not exceed the net cost of the rehabilitation of the site of the mine shall be made to a person under this section for the chargeable period related to the expenditure.

(b)Expenditure incurred by a person after the person ceases to carry on the trade of working a qualifying mine shall be treated as having been incurred on the last day on which the person carried on the trade.

(4)

(a)Subject to paragraphs (b) and (c), where the Minister has issued a certificate under subsection (2) in respect of a mine rehabilitation fund related to a qualifying mine, an allowance shall be made to the person who –

(i)is working the qualifying mine, and

(ii)is obliged to make relevant payments to the fund holder in relation to the fund,

for any chargeable period which falls wholly or partly in the period (in this subsection referred to as “the funding period”) commencing on the date on which the Minister gives the certificate and ending at the end of the estimated life of the mine, and the amount of the allowance shall be an amount determined by the formula –

 

where –

Eis the aggregate of the scheduled payments,

Nis the number of months in the chargeable period, or the part of the chargeable period falling in the funding period, and

Lis the number of years in the estimated life of the mine.

(b)The aggregate of the amounts of allowances under this subsection for a chargeable period and all preceding chargeable periods shall not exceed the aggregate of the amounts of relevant payments made in the chargeable period or its basis period and in all preceding chargeable periods or their basis periods.

(c)Where effect cannot be given to an allowance or part of an allowance under this subsection for a chargeable period by virtue of paragraph (b), the allowance or the part of the allowance, as the case may be, shall be added to the amount of an allowance under this subsection for the following chargeable period and, subject to paragraph (b), shall be deemed to be part of the allowance for that period or, if there is no such allowance for that period, shall be deemed to be the allowance for that period, and so on for succeeding periods.

(5)Where the Minister by notice in writing amends a certificate under subsection (2)(c) in a chargeable period or its basis period –

(a)if the aggregate of the amounts of allowances made under subsection (4) for the chargeable period and all preceding chargeable periods exceeds the aggregate of the amounts of allowances which would have been made under that subsection for those chargeable periods if the certificate had been amended in accordance with the notice at the time the certificate was given, an amount equal to the amount of the excess shall be treated as a trading receipt of the chargeable period in which, or in the basis period for which, the certificate was amended, and

(b)if the aggregate of the amounts of allowances which would have been made under subsection (4) for the chargeable period and all preceding chargeable periods if the certificate had been amended in accordance with the notice at the time the certificate was given exceeds the aggregate of the amounts of allowances made under that subsection for those chargeable periods, the allowance under subsection (4) for the chargeable period shall, subject to subsection (4)(b), be increased by an amount equal to the excess.

(6)

(a)Subject to paragraph (b), an amount received by a person who is working or has worked a qualifying mine, or by a person connected with such a person, from the fund holder of a mine rehabilitation fund in relation to the qualifying mine, or otherwise in connection with the mine rehabilitation fund, shall be treated as trading income of the person in accordance with this section.

(b)The amount to be treated as trading income for a chargeable period shall not exceed the excess of the aggregate of the amounts of allowances made under subsections (4) and (5) in that chargeable period and in any preceding chargeable periods over the aggregate amounts treated under this subsection or subsection (5) as trading income for all preceding chargeable periods.

(c)An amount to be treated under this subsection as trading income of a person shall be treated as income of –

(i)where the amount is received at any time when the person is working the qualifying mine, the chargeable period in which, or in the basis period for which, the amount is received, and

(ii)in any other case, the chargeable period in which the mine ceases to be worked.

(d)Notwithstanding paragraph (c), where an amount is to be treated as income of a chargeable period in accordance with subparagraph (ii) of that paragraph, the amount shall be assessed for the chargeable period in which, or in the basis period for which, the amount is received, and details of the receipt of the amount shall be included in the return required to be made by the person under Chapter 3 of Part 41A for that chargeable period.

(7)Where a person (in this subsection referred to as “the first-mentioned person”) ceases to work a qualifying mine and any obligations of the first-mentioned person to rehabilitate the site of the mine are transferred to any other person, that other person shall be treated for the purposes of this section as if that other person had worked the qualifying mine and as if everything done to or by the first-mentioned person had been done to or by that other person.

(8)As respects any person who incurs rehabilitation expenditure in respect of which an allowance is made under subsection (3) –

(a)rehabilitation expenditure shall not otherwise be deductible in computing income of the person for any purpose of income tax or corporation tax,

(b)an allowance shall not be made in respect of the expenditure under any provision of the Tax Acts other than this section, and

(c)to the extent that any receipts are taken into account under subsection (1)(b)(ii) to determine the net cost of the rehabilitation of the site of a mine, those receipts shall not constitute income of the person for any purpose of income tax or corporation tax.

(9)An allowance under this section made to a person who is carrying on a trade of working a mine shall be made in taxing that trade, and section 304(4) shall apply in relation to an allowance under subsection (4) as it applies in relation to allowances to be made under Part 9.

682.

Marginal mine allowance.

(1)In this section, “marginal mine” means a qualifying mine in respect of which the Minister for Communications, Energy and Natural Resources gives a certificate stating that that Minister is satisfied that the profits derived or to be derived from the working of that mine are such that, if tax is to be charged on those profits in accordance with the Income Tax Acts, other than this section, the mine is unlikely to be worked or to continue to be worked.

(2)The Minister for Finance, after consultation with the Minister for Communications, Energy and Natural Resources, may direct in respect of a marginal mine that for any particular year of assessment the tax chargeable on the profits of that qualifying mine shall be reduced to such amount (including nil) as may be specified by the Minister for Finance.

(3)Where a person is carrying on the trade of working a qualifying mine in respect of which the Minister for Finance gives a direction under subsection (2) in respect of a year of assessment, an allowance (which shall be known as a “marginal mine allowance”) shall be made as a deduction in charging the profits of that trade to income tax for that year of assessment of such amount or amounts as will ensure that the tax charged in respect of the profits of that trade shall equal the amount specified by that Minister.

(4)This section shall apply for corporation tax as it applies for income tax, and the references to the Income Tax Acts, to a year of assessment and to charging the profits of that trade to income tax shall apply as if they were respectively references to the Corporation Tax Acts, to an accounting period and to computing the profits of that trade for the purposes of corporation tax.

683.

Charge to tax on sums received from sale of scheduled mineral assets.

(1)In this section –

“chargeable period” means an accounting period of a company or a year of assessment;

any reference to the sale of a right to a scheduled mineral asset includes a reference to the grant of a licence to work scheduled minerals.

(2)Where a person resident in the State sells any scheduled mineral asset and the net proceeds of the sale consist wholly or partly of a capital sum, the person shall, subject to this section, be charged to tax under Case IV of Schedule D for the chargeable period in which the sum is received by the person on an amount equal to that sum; but where the person is an individual who, not later than 24 months after the end of the year of assessment in which the sum is paid, elects by notice in writing to the inspector to be charged to tax for that year of assessment and for each of the 5 succeeding years of assessment on an amount equal to one-sixth of that sum, the person shall be so charged.

(3)

(a)In this subsection, “tax” shall mean income tax, unless the seller of the scheduled mineral asset, being a company, would be within the charge to corporation tax in respect of any proceeds of the sale not consisting of a capital sum.

(b)Subject to paragraph (c), where a person not resident in the State sells any scheduled mineral asset and the net proceeds of the sale consist wholly or partly of a capital sum, then –

(i)the person shall be charged to tax in respect of that sum under Case IV of Schedule D for the chargeable period in which the sum is received by the person, and

(ii)section 238 shall apply to that sum as if it were an annual payment payable otherwise than out of profits or gains brought into charge to tax.

(c)Where the person referred to in paragraph (b) is an individual who, not later than 24 months after the end of the year of assessment in which the sum is paid elects by notice in writing to the Revenue Commissioners that the sum shall be treated for the purpose of tax for that year and for each of the 5 succeeding years as if one-sixth of that sum were included in his or her income chargeable to tax for each of those years respectively, it shall be so treated, and all such repayments and assessments of tax for each of those years shall be made as are necessary to give effect to the election; but –

(i)the election shall not affect the amount of tax to be deducted and accounted for under section 238,

(ii)where any sum is deducted under section 238, any adjustments necessary to give effect to the election shall be made by means of repayment of tax, and

(iii)those adjustments shall be made year by year and as if one-sixth of the sum deducted had been deducted in respect of tax for each year, and no repayment of, or of any part of, that portion of the tax deducted which is to be treated as deducted in respect of tax for any year shall be made unless and until it is ascertained that the tax ultimately to be paid for that year is less than the amount of tax paid for that year.

(4)Where the scheduled mineral asset sold by a person was acquired by the person by purchase and the price paid consisted wholly or partly of a capital sum, subsections (2) and (3) shall apply as if any capital sum received by the person when the person sells the asset were reduced by the amount of that sum; but nothing in this subsection shall affect the amount of tax to be deducted and accounted for under section 238 by virtue of subsection (3), and where any sum is deducted under section 238 any adjustment necessary to give effect to this subsection shall be made by means of repayment of tax.

(5)Where by virtue of an order made by the Minister for Communications, Energy and Natural Resources under section 14 of the Minerals Development Act, 1940, scheduled minerals or rights to work such minerals are acquired and that Minister pays compensation to any person in respect of such acquisition, that person shall be deemed for the purposes of this section to have sold a scheduled mineral asset for a capital sum equal to the amount of compensation paid to that person, and subsections (2) to (4) shall apply to the compensation as they apply to a capital sum received in respect of a sale of a scheduled mineral asset.

Chapter 2

Petroleum taxation (ss. 684-696A)

684.

Interpretation (Chapter 2).

(1)In this Chapter –

“abandonment activities”, in relation to a relevant field or any part of it, means those activities of a person, whether carried on by the person or on behalf of the person, which comply with the requirements of a petroleum lease held by the person, or, if the person is a company, held by the company or a company associated with it, in respect of –
(a)the closing down, decommissioning or abandonment of the relevant field or the part of it, as the case may be, or
(b)the dismantlement or removal of the whole or a part of any structure, plant or machinery which is not situated on dry land and which has been brought into use for the purposes of transporting as far as dry land petroleum won from the relevant field or from the part of it, as the case may be;

“abandonment expenditure”, in relation to a relevant field or any part of it, means expenditure incurred on abandonment activities in relation to the field or the part of it, as the case may be;

“chargeable period” means an accounting period of a company or a year of assessment;

“designated area” has the same meaning as it has in the Maritime Jurisdiction Act 2021;

“development expenditure” means capital expenditure incurred in connection with a relevant field on the provision for use in carrying on petroleum extraction activities of –
(a)machinery or plant,
(b)any works, buildings or structures, or
(c)any other assets,
which are of such a nature that when the relevant field ceases to be worked they are likely to be so diminished in value that their value will be nil or almost nil, but does not include –
(i)expenditure on any vehicle suitable for the conveyance by road of persons or goods or the haulage by road of other vehicles,
(ii)expenditure on any building or structure for use as a dwelling house, shop or office or for any purpose ancillary to the purposes of a dwelling house, shop or office,
(iii)
(I)expenditure incurred on petroleum exploration activities, and
(II)payments made to the Minister for Communications, Energy and Natural Resources on the application for, or in consideration of the granting of, a licence (other than a petroleum lease) or other payments made to that Minister in respect of the holding of the licence,
(iv)expenditure on the acquisition of the site of a relevant field, or of the site of any works, buildings or structures or of rights in or over any such site,
(v)expenditure on the acquisition of, or of rights in or over, deposits of petroleum,
(vi)expenditure on –
(I)machinery or plant, or
(II)works, buildings or structures,
provided for the processing or storing of petroleum won in the course of carrying on petroleum extraction activities, other than the initial treatment and storage of such petroleum,
or
(vii)any interest payment,

and “assets representing development expenditure” shall be construed accordingly and shall include any results obtained from any search or enquiry on which the expenditure was incurred;

“dry land” means land not permanently covered by water;

“exploration expenditure” means –
(a)capital expenditure incurred on petroleum exploration activities, and
(b)payments made to the Minister for Communications, Energy and Natural Resources on the application for, or in consideration of the granting of, a licence (other than a petroleum lease) or other payments made to that Minister in respect of the holding of the licence,
but does not include any interest payment, and “assets representing exploration expenditure” shall be construed accordingly and shall include any results obtained from any search, exploration or enquiry on which the expenditure was incurred;

“initial treatment and storage”, in relation to petroleum won from a relevant field,means the doing of any of the following –
(a)subjecting petroleum so won to any process of which the sole purpose is to enable the petroleum to be safely stored, safely loaded into a tanker or safely accepted for refining,
(b)separating petroleum so won and consisting of gas from other petroleum so won,
(c)separating petroleum won and consisting of gas of a kind that is transported and sold in normal commercial practice from other petroleum so won and consisting of gas,
(d)liquefying petroleum so won and consisting of gas of such a kind as is mentioned in paragraph (c) for the purpose of transporting such petroleum,
(e)subjecting petroleum so won to any process so as to secure that petroleum disposed of without having been refined has the quality that is normal for petroleum so disposed of from the relevant field, or
(f)storing petroleum so won before its disposal or its appropriation to refining or to any use, except use in –
(i)winning petroleum from a relevant field, including searching in that field for and winning access to such petroleum, or
(ii)transporting as far as dry land petroleum that is won from a place not on dry land,
but does not include any activity carried on as part of or in association with the refining of petroleum;

“licence” means –
(a)an exploration licence,
(b)a lease undertaking,
(c)a licensing option,
(d)a petroleum prospecting licence,
(e)a petroleum lease, or
(f)a reserved area licence,
granted in respect of an area in the State or a designated area under the Petroleum and Other Minerals Development Act, 1960, and which was granted subject to –
(i)the licensing terms set out in the Notice entitled “Ireland Exclusive Offshore Licensing Terms” presented to each House of the Oireachtas on the 29th day of April, 1975,
(ii)licensing terms presented to each House of the Oireachtas on a day or days which fall after the 29th day of April, 1975, or
(iii)licensing terms to which paragraph (i) or (ii) relates, as amended or varied from time to time;

“licensed area” means an area in respect of which a licence is in force;

“mining trade” means a trade consisting only of working a mine which is a qualifying mine or, in the case of a trade consisting partly of such an activity and partly of one or more other activities, the part of the trade consisting only of working such a mine which is treated by virtue of section 685 as a separate trade;

“petroleum” means petroleum (within the meaning of section 2(1) of the Petroleum and Other Minerals Development Act, 1960) won or capable of being won under the authority of a licence;

“petroleum activities” means any one or more of the following activities –
(a)petroleum exploration activities,
(b)petroleum extraction activities, and
(c)the acquisition, enjoyment or exploitation of petroleum rights;

“petroleum exploration activities” means activities of a person carried on by the person or on behalf of the person in searching for deposits of petroleum in a licensed area, in testing or appraising such deposits or in winning access to such deposits for the purposes of such searching, testing or appraising, where such activities are carried on under a licence (other than a petroleum lease) authorising the activities and held by the person or, if the person is a company, held by the company or a company associated with it;

“petroleum extraction activities” means activities of a person carried on by the person or on behalf of the person under a petroleum lease authorising the activities and held by the person or, if the person is a company, held by the company or a company associated with it in –
(a)winning petroleum from a relevant field, including searching in that field for and winning access to such petroleum,
(b)transporting as far as dry land petroleum so won from a place not on dry land, or
(c)effecting the initial treatment and storage of petroleum so won from the relevant field;

“petroleum profits”, in relation to a company which is chargeable to corporation tax on its profits, means the income of the company from petroleum activities and any amount to be included in its total profits in respect of chargeable gains accruing to the company from disposals of petroleum-related assets;

“petroleum-related asset” means any of the following assets or any part of such an asset –
(a)any petroleum rights,
(b)any asset representing exploration expenditure or development expenditure,
(c)shares deriving their value or the greater part of their value, whether directly or indirectly, from petroleum activities, other than shares dealt in on a stock exchange;

“petroleum rights” means rights to petroleum to be extracted or to interests in, or to the benefit of, petroleum, and includes an interest in a licence;

“petroleum trade” means a trade consisting only of trading activities which are petroleum activities or, in the case of a trade consisting partly of such activities and partly of other activities, the part of the trade consisting only of trading activities which are petroleum activities which is treated by virtue of section 685 as a separate trade;

“qualifying mine” has the same meaning as in section 672;

“relevant field” means an area in respect of which a licence, being a petroleum lease, is in force.

(2)For the purposes of this Chapter, 2 companies shall be associated with one another if –

(a)one company is a 51 per cent subsidiary of the other company,

(b)each company is a 51 per cent subsidiary of a third company, or

(c)one company is owned by a consortium of which the other company is a member,

and for the purposes of paragraph (c) a company shall be owned by a consortium if all the ordinary share capital of that company is directly and beneficially owned between them by 5 or fewer companies, which companies are in this Chapter referred to as “the members of the consortium”.

685.

Separation of trading activities.

(1)Where a person carries on any petroleum activities as part of a trade and those activities apart from any other activity would constitute a trade, those activities shall be treated for the purposes of the Tax Acts and the Capital Gains Tax Acts as a separate trade distinct from all other activities carried on by the person as part of the trade, and any necessary apportionment shall be made of receipts and expenses.

(2)Where a person works a qualifying mine as part of a trade, that activity shall be treated for the purposes of this Chapter as a separate trade distinct from all other activity carried on by the person as part of the trade, and any necessary apportionment shall be made of receipts and expenses.

686. Reduction of corporation tax.
Ceased from 3 February 2005
(1)In this section –

“petroleum profits on which corporation tax falls finally to be borne”, in relation to a company, means the amount of the petroleum profits of the company after making all deductions and giving or allowing all reliefs that for the purposes of corporation tax are made from, or given or allowed against, or are treated as reducing-

(a)those profits, or

(b)income or chargeable gains, if any, included in those profits;

“relevant petroleum lease” means a petroleum lease in respect of a relevant field, being a field discovered by petroleum exploration activities carried on under a licence (other than a petroleum lease) which authorises the carrying on of those activities for a period which, apart from any extension of the period or revision or renewal of the licence-

(a)is not longer than 10 years, where the petroleum lease is granted by the Minister for the Marine and Natural Resources before the 1st day of June, 2003,

(b)is longer than 10 years but not longer than 15 years, where the petroleum lease is granted by the Minister for the Marine and Natural Resources before the 1st day of June, 2007, or

(c)is longer than 15 years, where the petroleum lease is granted by the Minister for the Marine and Natural Resources before the 1st day of June, 2013,

but a petroleum lease in respect of a relevant field shall be a relevant petroleum lease where-

(i)the field was discovered under a lease which is not a licence,

(ii)the lease under which the field was discovered expired before the petroleum lease is granted, and

(iii)the petroleum lease is granted by the Minister for the Marine and Natural Resources before the 1st day of June, 2003.

(2)

(a)Subject to paragraph (b), corporation tax payable by a company for an accounting period shall be reduced by the amount, if any, determined by the formula-

 

where –

Iis the amount for the accounting period of the income to which this section applies, and

Ris the rate per cent of corporation tax specified in section 21(1) for the financial year or years in which the accounting period falls.

(b)Notwithstanding paragraph (a), where part of the accounting period falls in one financial year (in this paragraph referred to as “the first-mentioned financial year”) and the other part falls in the financial year succeeding the first-mentioned financial year and different rates of corporation tax are in force under section 21(1) for each of those years, then, R in paragraph (a) shall be the rate per cent determined by the formula –

 

where –

Ais the rate per cent in force for the first-mentioned financial year,

Bis the rate per cent in force for the financial year succeeding the first-mentioned financial year,

Cis the length of that part of the accounting period falling in the first-mentioned financial year,

Dis the length of that part of the accounting period falling in the financial year succeeding the first-mentioned financial year, and

Eis the length of the accounting period.

(3)The income to which this section applies shall be the income of a company for an accounting period determined by the formula –

 

where –

Fis the amount for the accounting period of the company’s petroleum profits on which corporation tax falls finally to be borne,

Gis the amount to be included in the company’s profits brought into charge to corporation tax for the accounting period in respect of chargeable gains accruing to the company from disposals of petroleum-related assets,

Sis the aggregate of the income of the company for the accounting period which is –

(a)trading income attributable to sales of petroleum won by the company, or

(b)income, other than trading income, from the enjoyment or exploitation of petroleum rights,

under a relevant petroleum lease granted to the company or a company associated with the company, and

Tis the aggregate of the income of the company for the accounting period from its petroleum trade or other petroleum activities.

(4)For the purposes of subsection (3), the income of a company for an accounting period which is trading income attributable to sales of petroleum won by the company under a relevant petroleum lease shall be the income, if any, determined by the formula –

 

where –

Ois the income of the company for the accounting period from its petroleum trade,

Pis the aggregate of money or money’s worth receivable by the company from sales in the accounting period of petroleum won by it under the relevant petroleum lease, and

Qis the aggregate of money or money’s worth receivable by the company from sales of petroleum in the accounting period in the course of carrying on its petroleum trade.

687.

Treatment of losses.

(1)Notwithstanding sections 381 and 396(2) –

(a)as respects a loss incurred by a person in a petroleum trade, relief shall not be given –

(i)under section 381 against any income other than income arising from petroleum activities, or

(ii)under section 396(2) against any profits other than petroleum profits,

and

(b)as respects any loss, other than a loss incurred in a petroleum or a mining trade, incurred by a person, relief shall not be given –

(i)under section 381 against income arising from petroleum activities, or

(ii)under section 396(2) against petroleum profits.

(2)Notwithstanding sections 383 and 399(1), the amount of any income of a person which is within the charge to tax under Case IV of Schedule D, and which is income arising from petroleum activities, shall not be reduced by the amount of any loss which may be relieved under section 383 or 399(1), other than a loss incurred in petroleum activities, and the amount of any loss so incurred shall not be treated under either of those sections as reducing the amount of any income other than income arising from petroleum activities.

(3)Notwithstanding sections 305(1)(b) and 308(4), a capital allowance which is to be given by discharge or repayment of tax, or in charging income under Case V of Schedule D, shall not to any extent be given effect –

(a)under section 305 against income arising from petroleum activities, or

(b)under section 308(4) against petroleum profits.

688.

Treatment of group relief.

(1)In this section, “claimant company” and “surrendering company” have the meanings respectively assigned to them by section 411.

(2)On a claim for group relief made by a claimant company in relation to a surrendering company, group relief shall not be allowed against any petroleum profits of the claimant company except to the extent that the claim relates to –

(a)a loss incurred by the surrendering company in a petroleum or mining trade, or

(b)charges on income paid, other than to a connected person, by the surrendering company which consist of payments made wholly and exclusively for the purposes of such a trade,

and group relief in respect of any such loss incurred by the surrendering company, or in respect of any charge on income paid by the surrendering company which is a payment made wholly and exclusively for the purposes of the petroleum or mining trade, shall not be allowed against any profits of the claimant company other than its petroleum profits.

689.

Restriction of relief for losses on certain disposals.

(1)Notwithstanding any provision of the Capital Gains Tax Acts or of the Corporation Tax Acts relating to the deduction of allowable losses for the purposes of capital gains tax or of corporation tax on chargeable gains –

(a)an allowable loss accruing on a disposal of an asset other than a petroleum-related asset shall not be deducted from the amount of a chargeable gain accruing on a disposal of a petroleum-related asset, and

(b)an allowable loss accruing on a disposal of a petroleum-related asset shall not be deducted from the amount of a chargeable gain accruing on a disposal of an asset other than a petroleum-related asset.

(2)Subsection (11) of section 597 shall apply as respects the application of that section to a disposal of assets which have been used by the person disposing of them for the purposes of a petroleum trade as if each reference in that subsection to a “trade” or “trades” were respectively a reference to a “petroleum trade” or “petroleum trades” within the meaning of this Chapter.

690.

Interest and charges on income.

(1)In computing the amount of –

(a)a person’s profits or gains for the purposes of income tax, or

(b)a person’s income for the purposes of corporation tax,

arising from a petroleum trade, no deduction shall be made in respect of –

(i)any interest payable by the person to a connected person to the extent that the amount of the interest exceeds for whatever reason the amount which, having regard to all the terms on which the money in respect of which it is payable was borrowed and the standing of the borrower, might have been expected to be payable if the lender and the borrower had been independent parties dealing at arm’s length,

(ii)interest payable by the person on any money borrowed to meet expenditure incurred on petroleum exploration activities, or

(iii)interest payable by the person on any money borrowed to meet expenditure incurred in acquiring petroleum rights from a connected person.

(2)Section 130(2)(d)(iv) shall not apply to so much of any interest as –

(a)would but for section 130(2)(d)(iv) be deductible in computing the amount of a company’s income from a petroleum trade,

(b)would not be precluded by subsection (1) from being so deducted, and

(c)is interest payable to a company which is a resident of a territory with the government of which arrangements having the force of law by virtue of section 826(1) have been made,

and for the purposes of paragraph (c) a company shall be regarded as being a resident of a territory if it is so regarded under arrangements made with the government of that territory and having the force of law by virtue of section 826(1).

(3)Notwithstanding section 243 –

(a)no deduction shall be allowed from that part of a company’s profits which consists of petroleum profits in respect of –

(i)a charge on income paid by the company to a connected person, or

(ii)any other charge on income paid by the company unless it is a payment made wholly and exclusively for the purposes of a petroleum or mining trade carried on by the company,

and

(b)no deduction shall be allowed from that part of a company’s profits which consists of profits other than petroleum profits in respect of any charge on income paid by the company which is a payment made wholly and exclusively for the purposes of a petroleum trade carried on by the company.

(4)In applying section 237 to any annual payment made by a person whose profits or gains for the purposes of income tax arise wholly or partly from petroleum activities –

(a)the profits or gains arising from those activities shall not be treated as profits or gains which have been brought into charge to income tax –

(i)where the annual payment is made to a connected person, or

(ii)unless (but subject to subparagraph (i)) the payment is made wholly and exclusively for the purposes of a petroleum or mining trade carried on by the person making the payment,

and

(b)profits or gains, other than profits or gains arising from petroleum activities, shall not be treated as profits or gains which have been brought into charge to income tax where the annual payment is made wholly and exclusively for the purposes of a petroleum trade carried on by the person making the payment.

(5)Relief shall not be allowed –

(a)under section 396(7) in respect of a payment to which subsection (3)(a)(i) applies, or

(b)under section 390 in respect of a payment to which subsection (4)(a)(i) applies,

where the payment is made wholly and exclusively for the purposes of a petroleum trade.

(6)In any case where for an accounting period of a company charges on income paid by the company are allowable under section 243 –

(a)such amount of those charges as, by virtue of subsection (3) –

(i)is not allowable against a part of the company’s profits, but

(ii)is allowable against the remaining part (in this subsection referred to as “other profits”) of its profits,

exceeds the other profits, and

(b)the amount of that excess is greater than the amount, if any, by which the total of the charges on income which, subject to subsection (3), are allowable to the company under section 243 exceeds the total of the company’s profits,

then, for the purpose of enabling the company to surrender the excess referred to in paragraph (a) by means of group relief, section 420(6)) shall apply as if –

(I)the reference in that section to the amount paid by the surrendering company by means of charges on income were a reference to so much of that amount as by virtue of subsection (3) is allowable only against the company’s other profits, and

(II)the reference in that section to the surrendering company’s profits were a reference to its other profits only.

691. Restriction of set-off of advance corporation tax.
Deleted from 6 February 2003
(1)Section 160 shall apply subject to subsection (2).

(2)Where advance corporation tax is paid by a company (in this subsection referred to as “the distributing company”) in respect of a distribution made by it to an associated company resident in the State –

(a)that advance corporation tax shall not be set against the distributing company’s liability to corporation tax on any income included in its petroleum profits, and

(b)if the benefit of any amount of that advance corporation tax is surrendered under section 166 by the distributing company to another company, the corresponding amount of advance corporation tax which under that section that other company is treated for the purposes of section 160 as having paid shall not be set against that other company’s liability to corporation tax on any income included in its petroleum profits.

(3)This section shall not apply as respects any distribution made before the 24th day of April, 1992.

692.

Development expenditure: allowances and charges.

(1)Subject to subsection (4), the provisions of the Tax Acts relating to allowances and charges in respect of capital expenditure shall apply in relation to a petroleum trade as if each reference in those provisions to machinery or plant included a reference to assets, not being machinery or plant, representing development expenditure.

(2)In relation to assets representing development expenditure, section 284(2) shall, subject to subsection (3), apply as if the references in paragraphs (a)(i), (aa) and (ad) of that section to 15 per cent, 20 per cent and 12.5 per cent, respectively, were each a reference to 100 per cent.

(3)Assets representing development expenditure shall not be treated for the purposes of section 284(1) as being in use for the purposes of a petroleum trade at the end of any chargeable period or its basis period which ends before the commencement of production of petroleum in commercial quantities from the relevant field in connection with which the assets were provided.

(4)The following provisions shall not apply as respects development expenditure –

(a)Chapters 1 and 3 of Part 9,

(b)section 283,

(c)section 670,

(d)Chapter 1 of Part 29,

(e)sections 763 to 765, and

(f)section 768.

(5)

(a)For the purposes of this section, assets representing development expenditure shall be deemed to include assets (in this subsection referred to as “leased assets”) provided for leasing to a person carrying on a petroleum trade where such leased assets would, if they had been provided by that person, be assets representing development expenditure, and where this paragraph applies –

(i)section 284 shall apply as if the trade for the purposes of which the leased assets are (or would under section 298(1) be regarded as being) in use were a petroleum trade carried on by the lessor, and

(ii)section 403 shall apply as if each reference in that section to machinery or plant included a reference to assets, not being machinery or plant, representing development expenditure.

(b)For the purposes of subsection (4), capital expenditure on the provision of leased assets shall be deemed to be development expenditure.

693.

Exploration expenditure: allowances and charges.

(1)Subject to subsections (5) and (16), where a person carrying on a petroleum trade has incurred any exploration expenditure (not being expenditure which has been or is to be met directly or indirectly by any other person) there shall be made to the person for the chargeable period related to the expenditure an allowance equal to the amount of the expenditure.

(2)

(a)Subject to paragraph (b), where a person carrying on a petroleum trade has incurred any exploration expenditure in respect of which an allowance has been made to the person under subsection (1) and disposes of assets representing any amount of that expenditure, a charge (in this section referred to as a “balancing charge”) equal to the net amount or value of the consideration in money or money’s worth received by the person on the disposal shall be made on the person for the chargeable period related to the disposal or, if the disposal occurs after the date on which the trade is permanently discontinued, for the chargeable period related to the discontinuance.

(b)The amount on which a balancing charge is made shall not exceed the amount of the allowance made to the person under subsection (1) in respect of the amount of exploration expenditure represented by the assets disposed of.

(3)Where any assets representing exploration expenditure are destroyed, those assets shall for the purposes of subsection (2) be treated as if they had been disposed of immediately before their destruction, and any sale, insurance, salvage or compensation moneys received in respect of the assets by the person carrying on the petroleum trade shall be treated as if those moneys were consideration received on that disposal.

(4)Where a person disposes of any assets representing exploration expenditure incurred by the person in connection with an area which at the time of the disposal is, or which subsequently becomes, a relevant field (or part of such a field), the person who acquires the assets shall, if that person carries on a petroleum trade which consists of or includes the working of the relevant field (or, as the case may be, the part of the relevant field), be deemed for the purposes of this section to have incurred –

(a)on the day on which that person acquires the assets, or

(b)if later, on the day on which that person commences to work the area connected with the assets as a relevant field (or, as the case may be, as part of the relevant field),

an amount of exploration expenditure equal to the lesser of –

(i)the amount of the exploration expenditure represented by the assets, and

(ii)the amount or value of the consideration given by that person on the acquisition of the assets.

(5)

(a)Any exploration expenditure incurred by a person before the person commences to carry on a petroleum trade shall be treated for the purposes of subsection (1) as if that expenditure had been incurred by that person on the first day on which that person carries on the petroleum trade.

(b)Notwithstanding paragraph (a), no account shall be taken for the purposes of this subsection of expenditure incurred in connection with an area which is not a relevant field, or part of such a field, being worked in the course of carrying on the petroleum trade, if the expenditure was incurred more than 25 years before that first day.

(6)Where a person incurs exploration expenditure before commencing to carry on a petroleum trade and subsection (5) applies as respects that expenditure and, before the person commences to carry on that trade, the person disposes of assets representing any amount of that expenditure, the allowance to be made to the person under this section in respect of that expenditure shall be reduced by the net amount or value of any consideration in money or money’s worth received by the person on that disposal.

(7)For the purposes of this section other than for the purposes of subsections (4) and (5)(a), the day on which any expenditure is incurred shall be taken to be the day on which the sum in question becomes payable.

(8)Any allowance or balancing charge made to or on a person under this section shall be made to or on the person in taxing the person’s petroleum trade but, subject to subsection (4), such allowance shall not be made in respect of the same expenditure in taxing more than one such trade.

(9)Section 304(4) shall apply in relation to an allowance under this section as it applies in relation to an allowance to be made under Part 9.

(10)Section 307(2)(a) shall apply for the purposes of this section, and subsections (2) to (7) of section 321 shall apply for the interpretation of this section.

(11)Subsections (2) and (3) of section 306 shall apply in determining the chargeable period (being a year of assessment) for which an allowance or a balancing charge is to be made under this section.

(12)References to capital expenditure in Part 9 and in section 670, Chapter 1 of Part 29 and sections 763 to 765 shall be deemed not to include references to expenditure which is exploration expenditure, and exploration expenditure shall be deemed not to be expenditure on know-how for the purposes of section 768.

(13)Notwithstanding subsection (12), the following provisions –

(a)section 312,

(b)subsections (1) and (2) of section 316,

(c)section 317(2),

(d)section 318, and

(e)subsections (4) and (5) of section 320,

shall, with any necessary modifications, apply for the purposes of this section as they apply for the purposes of Part 9 and Chapter 1 of Part 29.

(14)Part 19 shall apply as if –

(a)the reference in section 551(3) to a balancing charge included a reference to a balancing charge under this section, and

(b)references in section 555 to a capital allowance (or capital allowances) and to a balancing charge included references respectively to an allowance (or allowances) and a balancing charge under this section.

(15)Section 319 shall apply as if subsections (1) and (2) of that section included references to this section.

(16)For the purposes of this section, a person shall be deemed not to be carrying on a petroleum trade unless and until the person is carrying on in the course of that trade trading activities which are petroleum extraction activities.

(17)Any reference in this section to assets representing any exploration expenditure shall be construed as including a reference to a part of or share in any such assets, and any reference in this section to a disposal or acquisition of any such assets shall be construed as including a reference to a disposal or acquisition of a part of or share in any such assets.

694.

Exploration expenditure incurred by certain companies.

(1)For the purposes of section 693, where exploration expenditure (not being expenditure which has been or is to be met directly or indirectly by any other person) is incurred by a company (in this section referred to as an “exploration company”) and –

(a)another company is a wholly-owned subsidiary of the exploration company, or

(b)the exploration company is at the time the exploration expenditure is incurred a wholly-owned subsidiary of another company (in this section referred to as “the parent company”),

then, the expenditure or so much of it as the exploration company specifies –

(i)in the case referred to in paragraph (a), may at the election of the exploration company be deemed to have been incurred by such other company (being a wholly-owned subsidiary of the exploration company) as the exploration company specifies, and

(ii)in the case referred to in paragraph (b), may at the election of the exploration company be deemed to have been incurred by the parent company or by such other company (being a wholly-owned subsidiary of the parent company) as the exploration company specifies.

(2)Where under subsection (1) exploration expenditure incurred by an exploration company is deemed to have been incurred by another company (in this subsection referred to as “the other company”) –

(a)the expenditure shall be deemed to have been incurred by the other company at the time at which the expenditure was actually incurred by the exploration company,

(b)in a case where the expenditure was incurred at a time before the incorporation of the other company, that company shall be deemed to have been in existence at the time the expenditure was incurred, and

(c)in the application of section 693 to a petroleum trade carried on by the other company, the expenditure shall be deemed –

(i)to have been incurred by the other company for the purposes of that trade, and

(ii)not to have been met directly or indirectly by the exploration company.

(3)The same expenditure shall not be taken into account in relation to more than one trade by virtue of this section.

(4)A deduction or allowance shall not be made in respect of the same expenditure both by virtue of this section and under some other provision of the Tax Acts.

(5)A company shall for the purposes of subsection (1) be deemed to be a wholly-owned subsidiary of another company if and so long as all of its ordinary share capital is owned by that other company, whether directly or through another company or other companies, or partly directly and partly through another company or other companies, and paragraph 6 of Schedule 9 shall apply for the purposes of supplementing this subsection as if the reference in that paragraph to that Schedule were a reference to this subsection.

695.

Abandonment expenditure: allowances and loss relief.

(1)In this section, “abandonment losses” means so much of a loss in a petroleum trade incurred by a person in a chargeable period as does not exceed the total amount of allowances which –

(a)are to be made to the person for that chargeable period under this section, and

(b)have been taken into account in determining the amount of that loss in the petroleum trade.

(2)Subject to subsections (5) to (9), where in a chargeable period a person, who is or has been carrying on in relation to a relevant field or a part of it petroleum extraction activities other than effecting the initial treatment and storage of petroleum that is won from the relevant field, incurs abandonment expenditure (not being expenditure which has been or is to be met directly or indirectly by any other person) in relation to the field or the part of it, as the case may be, there shall be made to the person for the chargeable period an allowance equal to the amount of the expenditure.

(3)

(a)Subject to paragraph (b), as respects so much of a loss in a petroleum trade incurred by a person in a chargeable period as is an abandonment loss, the person shall be entitled on making a claim in that behalf to such repayment of income tax as is necessary to secure that the aggregate amount of income tax for the chargeable period and the 3 chargeable periods immediately preceding it will not exceed the amount which would have been borne by the person if the person’s income arising from petroleum activities for each of those chargeable periods had been reduced by the lesser of –

(i)the abandonment loss, and

(ii)so much of the abandonment loss as could not on that claim be treated as reducing such income of a later chargeable period.

(b)Relief under paragraph (a) in respect of a loss shall be deemed for the purposes of the Tax Acts to be relief given under section 381(1) such that –

(i)no further relief shall be given under section 381(1) in respect of so much of an abandonment loss as is an amount in respect of which relief has been given under paragraph (a), and

(ii)subsections (3) to (7) of section 381 and section 392 shall apply to relief under paragraph (a) as they apply to relief under section 381.

(c)As respects so much of a loss in a petroleum trade incurred by a person in a chargeable period as is an abandonment loss, subsections (2) and (3) of section 396 shall apply as if the time specified in subsection (3) of that section were a period of 3 years ending immediately before the chargeable period in which the loss is incurred.

(4)So much of the abandonment losses, if any, incurred by a person on or before the day on which the person permanently discontinues to carry on a petroleum trade (in this subsection referred to as “the first-mentioned trade”) as would not apart from this subsection be allowed against or treated as reducing the person’s or any other person’s income or profits, shall be treated as incurred by the person in the first chargeable period of the first petroleum trade (in this section referred to as “the new trade”) to be carried on by the person after the permanent discontinuance of the first-mentioned trade as a trading expense of the new trade.

(5)Where a petroleum trade carried on by a person has been permanently discontinued, any abandonment expenditure incurred by the person after the discontinuance shall be treated for the purposes of subsection (2) as if that expenditure had been incurred by the person on the last day on which the person carries on the petroleum trade.

(6)For the purposes of this section other than subsections (4) and (5), the day on which any expenditure is incurred shall be taken to be the day on which the sum in question becomes payable.

(7)Any allowance made to a person under this section shall be made in taxing the person’s petroleum trade, but such allowance shall not be made in respect of the same expenditure in taxing more than one trade.

(8)References to capital expenditure in Part 9 and in section 670, Chapter 1 of Part 29 and sections 763 to 765 shall be deemed not to include references to expenditure which is abandonment expenditure; but subsections (1) and (2) of section 316 and sections 317(2) and 320(5) shall, with any necessary modifications, apply for the purposes of this section as they apply for the purposes of Part 9 and Chapter 1 of Part 29.

(9)Subsections (9) to (11) and (15) of section 693 shall apply for the purposes of this section as they apply for the purposes of that section.

696.

Valuation of petroleum in certain circumstances.

(1)Where a person disposes, otherwise than by means of a sale at arm’s length, of petroleum acquired by the person by virtue of petroleum activities carried on by the person, then, for the purposes of the Tax Acts the disposal of the petroleum and its acquisition by the person to whom the disposal was made shall be treated as having been for a consideration equal to the market value of the petroleum at the time the disposal was made.

(2)

(a)In this subsection, “relevant appropriation”, in relation to any petroleum won or otherwise acquired in the course of the carrying on by a person of petroleum activities, means the appropriation of that petroleum to refining or to any use except use for petroleum extraction activities carried on by the person, and “relevantly appropriated” shall be construed accordingly.

(b)Where a person who carries on in the course of a trade petroleum activities and other activities makes a relevant appropriation of any petroleum won or otherwise acquired by the person in the course of the petroleum activities without disposing of the petroleum, then, for the purposes of the Tax Acts the person shall be treated as having at the time of the appropriation –

(i)sold the petroleum in the course of the petroleum trade carried on by the person, and

(ii)bought the petroleum in the course of a separate trade consisting of the activities other than the petroleum activities,

and as having so sold and bought the petroleum at a price equal to its market value at the time the petroleum was relevantly appropriated.

(3)For the purposes of this section, the market value at any time of any petroleum shall be the price which that petroleum might reasonably be expected to fetch on a sale of that petroleum at that time if the parties to the transaction were independent parties dealing at arm’s length.

696A.

Treatment of certain disposals.

(1)In this section, “relevant period”, as respects a disposal, means the period beginning 12 months before and ending 3 years after the disposal, or such longer period as the Minister for Communications, Energy and Natural Resources may, on the application of the person making the disposal, certify to be in that Minister’s opinion reasonable having regard to the proper exploration, delineation or development of any licensed area.

(2)This section shall apply where on or after the 14th day of January, 1985, a person, with the consent of the Minister for Communications, Energy and Natural Resources, makes a disposal of an interest in a licensed area (including the part disposal of such an interest or the exchange of an interest owned by the person in one licensed area for an interest in another licensed area) and the disposal is shown to the satisfaction of that Minister to have been made for the sole purpose of ensuring the proper exploration, delineation or development of any licensed area.

(3)Where this section applies as respects a disposal by a person (neither being nor including an exchange referred to in subsection (2)) and the consideration received by the person is in the relevant period wholly and exclusively applied (whether by the person, or on that person’s behalf by the person acquiring the asset disposed of) for the purposes of either or both of the following –

(a)petroleum exploration activities, and

(b)searching for or winning access to petroleum in a relevant field,

then, for the purposes of the Capital Gains Tax Acts, if the person making the disposal makes a claim in that behalf, the disposal shall not be treated as involving any disposal of an asset but the consideration shall not, as respects any subsequent disposal of any asset acquired or brought into being or enhanced in value by the application of that consideration, be deductible from the consideration for that subsequent disposal in the computation of the chargeable gain accruing on that disposal.

(4)

(a)Where this section applies as respects an exchange referred to in subsection (2), then, for the purposes of the Capital Gains Tax Acts, if the person making such an exchange makes a claim in that behalf, the exchange shall not be treated as involving any disposal or acquisition by that person of an asset, but the asset given by that person and the asset acquired by that person in the exchange shall be treated as the same asset acquired as the asset given by that person was acquired.

(b)Notwithstanding paragraph (a) –

(i)where the person receives for the exchange any consideration in addition to the interest in the other licensed area, this subsection shall not apply as respects the claim made by that person unless the additional consideration is applied in the relevant period in the manner referred to in subsection (3) but, where that additional consideration is so applied and the person makes a claim that this subsection should apply, it shall so apply as if the asset given by that person in exchange were such portion only of that asset as is equal in value to the interest in the other licensed area taken by that person in the exchange, and subsection (3) shall apply as if the remaining portion of the asset so given by that person were disposed of by that person for that additional consideration, and

(ii)where the person gives for the exchange any consideration in addition to the interest in a licensed area given by that person in the exchange, this subsection shall apply as respects the claim made by that person as if the interest in the other licensed area taken by that person in the exchange were such portion only of that interest as is equal in value to the interest in the licensed area given by that person in the exchange.

Chapter 3

Profit Resource Rent Tax (ss. 696B-696F)

696B.

Interpretation and application (Chapter 3).

(1)In this Chapter –

“cumulative field expenditure” in relation to an accounting period of a company in respect of a taxable field, means the aggregate of the taxable field expenditure of the company in respect of the taxable field –
(a)for that accounting period, and
(b)for any preceding accounting period beginning on or after 1 January 2007;

“cumulative field profits” in relation to an accounting period of a company in respect of a taxable field, means the aggregate of the net taxable field profits of the company in respect of the taxable field –
(a)for that accounting period, and
(b)for any preceding accounting period beginning on or after 1 January 2007,
after deducting the amount of any loss incurred in respect of the taxable field for any such period;

“net taxable field profits” in relation to an accounting period of a company, means the taxable field profits of the company for the accounting period after deducting the amount of corporation tax (if any) which would, apart from this Chapter, be payable by the company for the accounting period if the tax were computed on the basis of those profits;

“profit ratio” in relation to an accounting period of a company in respect of a taxable field, means an amount determined by the formula – where –
Ais the cumulative field profits of the company in respect of the taxable field in relation to that accounting period, and
Bis the cumulative field expenditure of the company in respect of the taxable field in relation to that accounting period;

“profit resource rent tax” has the meaning given to it in section 696C;

“specified licence” means –
(a)an exploration licence, or a reserved area licence, that is granted on or after 1 January 2007, or
(b)a licensing option;

“taxable field” means an area in respect of which a petroleum lease entered into following on from a specified licence is in force;

“taxable field expenditure” in relation to an accounting period of a company, means the aggregate of the amounts of capital expenditure which consist of –
(a)abandonment expenditure
(b)development expenditure, and
(c)exploration expenditure
incurred by the company for the accounting period in respect of a taxable field;

“taxable field profits” in relation to an accounting period of a company, means the amount of the petroleum profits of the company in respect of a taxable field, after making all deductions and giving or allowing all reliefs that for the purposes of corporation tax are made from, or given or allowed against, or are treated as reducing –
(a)those profits, or
(b)income or chargeable gains, if any, included in those profits.

(2)For the purposes of this Chapter –

(a)the interpretations in section 684 shall apply, with any necessary modifications, in relation to expenditure and activities carried on under a specified licence as they would apply in relation to expenditure and activities carried on under a licence within the meaning of section 684 if such a licence was a specified licence, and

(b)capital expenditure incurred on or after 1 January 2007 by a company in an area which is not a taxable field but which subsequently becomes a taxable field (or part of such a field) shall be treated as if it had been incurred by the company on the day on which the area first becomes a taxable field (or part of such a field).

(3)

(a)Where a company carries on a petroleum trade and that petroleum trade includes petroleum activities carried on under a specified licence, such activities shall, for the purposes of this Chapter, be treated in respect of each taxable field as a separate petroleum trade distinct from all other activities carried on by the company as part of the trade.

(b)Any necessary apportionment in computing taxable field profits or taxable field expenditure of a company under paragraph (a) shall be made on a just and reasonable basis.

(c)Subject to paragraph (d) the provisions of sections 687 to 690 shall apply for the purposes of this Chapter in relation to any activities treated under paragraph (a) as a separate trade as they apply to a petroleum trade within the meaning of those sections.

(d)For the purposes of applying this Chapter, in relation to an accounting period of a company in respect of a taxable field, no account shall be taken of any charges paid, interest payable or a loss incurred –

(i)by any other company, or

(ii)by the first-mentioned company,

in respect of activities other than activities in relation to that field.

696C.

Charge to profit resource rent tax.

(1)Where for an accounting period of a company the profit ratio of the company in relation to a taxable field is equal to 1.5 or more, an additional duty of corporation tax (in this Chapter referred to as a ‘profit resource rent tax’) shall be charged on the profits of the company in accordance with the provisions of this Chapter.

(2)Profit resource rent tax shall be charged on the profits to which this Chapter applies of a company for an accounting period at the rate of –

(a)5 per cent, where the profit ratio is less than 3,

(b)10 per cent, where the profit ratio is equal to or greater than 3 and less than 4.5,

(c)15 per cent, where the profit ratio is equal to or greater than 4.5.

(3)The profits to which this Chapter applies as respects any taxable field for an accounting period of a company shall –

(a)in respect of any accounting period in relation to which –

(i)the profit ratio is equal to or greater than 1.5, and

(ii)the profit ratio for the immediately preceding accounting period was less than 1.5,

be determined by the formula –

(A – (B x 1,5)) x 1010010

100 – R

where –

Ais the cumulative field profits of the company in respect of the taxable field in relation to the accounting period,

Bis the cumulative field expenditure of the company in respect of the taxable field in relation to the accounting period, and

Ris the rate per cent specified in section 21A(3),

and

(b)in respect of any other accounting period of the company, be the taxable field profits of the company in respect of the taxable field for the accounting period.

696D.

Provisions relating to groups (Chapter 3).

(1)Where taxable field expenditure in respect of a taxable field is incurred by a company (in this section referred to as the ‘first company’) and

(a)another company is a wholly-owned subsidiary of the first company, or

(b)the first company is, at the time the taxable field expenditure is incurred, a wholly-owned subsidiary of another company (in this section referred to as the ‘parent company’),

then, the expenditure or so much of it as the first company specifies, may at the election of that company be deemed to be taxable field expenditure in respect of the taxable field incurred –

(i)in the case referred to in paragraph (a), by such other company (being a wholly-owned subsidiary of the first company) as the first company specifies, and

(ii)in the case referred to in paragraph (b), by the parent company or by such other company (being a wholly-owned subsidiary of the parent company) as the first company specifies.

(2)Where under subsection (1) taxable field expenditure incurred by a first company is deemed to have been incurred by another company (in this subsection referred to as the ‘other company’) –

(a)the expenditure shall be deemed to have been incurred by the other company at the time at which the expenditure was actually incurred by the first company, and

(b)in the application of this Chapter the expenditure shall –

(i)be deemed to have been incurred by the other company for the purposes of determining the cumulative field expenditure of that company, and

(ii)be deemed not to have been incurred by the first company for the purposes of determining the cumulative field expenditure of that company.

(3)The same expenditure shall not be taken into account in relation to the determination of cumulative expenditure for more than one taxable field by virtue of this section.

(4)Subsection (5) of section 694 applies for the purposes of subsection (1) as it applies for the purposes of that subsection.

696E.

Returns (Chapter3).

(1)In this section ‘prescribed form’ means a form prescribed by the Revenue Commissioners or a form used under the authority of the Revenue Commissioners, and includes a form which involves the delivery of a statement by any electronic, photographic or other process approved of by the Revenue Commissioners.

(2)A company carrying on petroleum activities under a specified licence shall, in addition to the return required to be delivered under Chapter 3 of Part 41A, prepare and deliver to the Collector-General at the same time as, and together with, the return required under section 951 on or before the specified return date for the chargeable period a full and true statement in a prescribed form of the details required by the form in respect of –

(a)the amounts constituting the aggregate of the cumulative field expenditure for each field,

(b)the amounts constituting the aggregate of the cumulative field profits for each field,

(c)the breakdown of the amounts specified in paragraphs (a) and (b), and

(d)the amount of profit resource rent tax, if any, payable in respect of each field,

and of such further particulars in relation to this Chapter as may be required by the prescribed form.

(3)An officer of the Revenue Commissioners may make such enquiries or take such actions within his or her powers as he or she considers necessary for the purposes of determining the accuracy or otherwise of any details or particulars contained in the statement referred to in subsection (2).

(4)Subsection (5) of section 959I and subsections (2) and (3) of section 959O shall apply to a statement required to be delivered under this section as they apply to a return required to be delivered under that section, and for that purpose a reference in those subsections to a return, other than a reference to the specified return date for the chargeable period, shall be construed as a reference to a statement under this section.

(5)Section 1052 shall apply to a failure by a person to deliver a statement under this section or the details or particulars referred to in subsection (3) as it applies to a failure to deliver a return referred to in section 1052.

696F.

Collection and general provisions.

(1)The provisions of the Corporation Tax Acts relating to –

(a)assessments to corporation tax, and

(b)the collection and recovery of corporation tax,

shall apply in relation to a profit resource rent tax charged under section 696C as they apply to corporation tax charged otherwise than under this Chapter.

(2)

(a)Any amount of profit resource rent tax payable in accordance with this Chapter without the making of an assessment shall carry interest at the rate of 0.0273 per cent for each day or part of a day from the date when the amount becomes due and payable until payment.

(b)Section 1080 shall apply in relation to interest payable under paragraph (a) as it applies in relation to interest payable under section 1080.

 

 

Chapter 4

Petroleum production tax (ss. 696G-696M)

696G.

Interpretation and application (Chapter 4)

(1)In this Chapter –

“cumulative field cost”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of field costs –
(a)for that relevant period, and
(b)for any preceding relevant period;

“cumulative field gross revenue”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of the gross revenues –
(a)for that relevant period, and
(b)for any preceding relevant period,
less the aggregate petroleum production tax payable by the company in respect of the same taxable field for all preceding relevant periods;

“eligible expenditure”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of the amounts of –
(a)all expenditure, including exploration and development expenditure wholly and exclusively incurred by the company in the carrying on of petroleum activities for the relevant period in respect of a taxable field,
(b)all expenditure, including exploration and development expenditure wholly and exclusively incurred by the company in the carrying on of petroleum activities in respect of any preceding relevant period where such expenditure was not previously allowed as a deduction in computing petroleum production tax, and
(c)all abandonment expenditure where an allowance may be claimed by reference to the provisions of section 695;

“field costs”, in relation to a relevant period of a company in respect of a taxable field, means the aggregate of all expenditure, including exploration expenditure, development expenditure and transportation expenditure, wholly and exclusively incurred by the company in the carrying on of petroleum activities in respect of that taxable field;

“gross revenue”, means all sales of petroleum extracted for a relevant period from a taxable field including any amounts derived from the assignment, disposal or sale of any assets, interests, options or rights attaching to or related to a taxable field;

“net income”, in relation to a relevant period of a company in respect of a taxable field, means the gross revenue less eligible expenditure incurred in respect of that taxable field;

“petroleum production tax”, has the meaning given to it by section 696H;

“relevant period”, means an accounting period or part of an accounting period which commences on or after 18 June 2014;

“R factor”, in relation to a relevant period of a company in respect of a taxable field, means an amount determined by the formula – where –
Ais
the cumulative field gross revenue of the company in respect of the taxable field in relation to that relevant period, and
Bthe cumulative field costs of the company in respect of the taxable field in relation to that relevant period;

“specified licence”, means –
(a)an exploration licence (other than a licence arising from the exercise of a licensing option issued prior to 18 June 2014),
(b)a reserved area licence, or
(c)a licensing option,
that is granted on or after 18 June 2014;

“taxable field”, means an area which was the subject of a specified licence and which is now the subject of a petroleum lease;

“taxable field”, means expenses incurred wholly and exclusively on the transportation of petroleum via pipeline from the taxable field to a place where it is first landed in the State or if produced on a platform, from the wellhead to the carrier if the carrier serves as the point of export.

(2)In this Chapter, section 684 shall apply subject to the modification that the section shall be read, as if references to expenditure and activities carried on under a licence within the meaning of section 684, are references to expenditure and activities carried on under a specified licence and to any other necessary modifications.

(3)For the purposes of applying this Chapter –

(a)where a part of an accounting period of a company is a relevant period, all amounts referable to the accounting period shall be apportioned, on the basis of the proportion which the length of the relevant period bears to the length of the accounting period of the company, for the purpose of ascertaining any amount required to be taken into account in respect of the relevant period, and

(b)expenditure incurred on or after 18 June 2014 by a company in an area which is not a taxable field but which subsequently becomes a taxable field (or part of such a field) shall be treated as if it had been incurred by the company on the day on which the area first becomes a taxable field (or part of such a field).

696H.

Charge to petroleum production tax

(1)

(a)An additional duty (in this Chapter referred to as a ‘petroleum production tax’) shall be charged for each taxable field in a relevant period of a company and the amount so charged shall be an amount calculated in accordance with paragraph (b).

(b)The amount calculated in accordance with this paragraph shall be the greater of –

(i)5 per cent of the gross revenue less transportation expenditure, or

(ii)

(I)10 per cent of the net income, where the R factor in relation to a taxable field is equal to 1.5,

(II)an amount determined by the formula –

 

multiplied by the net income, where the R factor in relation to a taxable field is greater than 1.5 and less than 4.5, or

(III)40 per cent of the net income, where the R factor in relation to a taxable field is equal to or greater than 4.5.

(2)For the purpose of calculating petroleum production tax for a relevant period, section 696 shall apply as if the provisions of that section were extended to petroleum related assets.

(3)No charge to profit resource rent tax under section 696C shall apply to a taxable field to which this section applies.

696I.

Petroleum production tax and corporation tax

In computing the amount of profits or gains to be charged to corporation tax a company shall be entitled to claim a deduction in respect of any petroleum production tax payable in respect of any taxable field for that relevant period.

696J.

Provisions relating to groups

(1)Where eligible expenditure in respect of a taxable field is incurred by a company (in this section referred to as the ‘first company’), and

(a)another company is a wholly-owned subsidiary of the first company, or

(b)the first company is, at the time the eligible expenditure is incurred, a wholly-owned subsidiary of another company (in this section referred to as the ‘parent company’),

then, the expenditure or so much of it as the first company specifies, may at the election of that company be deemed to be eligible expenditure in respect of the taxable field incurred –

(i)in the case referred to in paragraph (a), by such other company (being a wholly-owned subsidiary of the first company) as the first company specifies, and

(ii)in the case referred to in paragraph (b), by the parent company or by such other company (being a wholly-owned subsidiary of the parent company) as the first company specifies.

(2)Where under subsection (1) eligible expenditure incurred by a first company is deemed to have been incurred by another company (in this subsection referred to as the ‘other company’) –

(a)the expenditure shall be deemed to have been incurred by the other company at the time at which the expenditure was actually incurred by the first company, and

(b)in the application of this Chapter the expenditure shall be deemed –

(i)to have been incurred by the other company for the purposes of determining the cumulative field costs of that company, and

(ii)not to have been incurred by the first company for the purposes of determining the cumulative field costs of that company.

(3)The same expenditure shall not be taken into account in relation to the determination of cumulative expenditure for more than one taxable field by virtue of this section.

(4)Subsection (5) of section 694 applies for the purposes of subsection (1) as it applies for the purposes of that subsection.

696K.

Returns

(1)In this section ‘prescribed form’ means a form prescribed by the Revenue Commissioners or a form used under the authority of the Revenue Commissioners.

(2)A company carrying on petroleum activities in a taxable field shall, in addition to the return required to be delivered under section 959I, prepare and deliver to the Collector-General on or before the specified return date, within the meaning of Part 41A, for the relevant period a full and true statement in a prescribed form of the details required by the form in respect of –

(a)the amounts constituting the aggregate of the cumulative field costs for each field,

(b)the amounts constituting the aggregate of the cumulative field gross revenue for each field,

(c)the breakdown of the amounts specified in paragraphs (a) and (b), and

(d)the amount of petroleum production tax payable in respect of each field,

and of such further particulars in relation to this Chapter as may be required by the prescribed form.

(3)A statement required under this section shall be made by electronic means and the relevant provisions of Chapter 6 of Part 38 shall apply.

(4)An officer of the Revenue Commissioners may make such enquiries or take such actions within his or her powers as he or she considers necessary for the purposes of determining the accuracy or otherwise of any details or particulars contained in the statement referred to in subsection (2).

(5)Subsection (5) of section 959I and subsections (2) and (3) of section 959O shall apply to a statement required to be delivered under this section as they apply to a return required to be delivered under Chapter 3 of Part 41A, and for that purpose a reference in those subsections to a return, other than a reference to the specified return date for the chargeable period, shall be construed as a reference to a statement under this section.

(6)Section 1052 shall apply to a failure by a person to deliver a statement under this section or the details or particulars referred to in subsection (2) as it applies to a failure to deliver a return referred to in section 1052.

(7)Section 1077E or 1077F, as appropriate, shall apply to an incorrect statement delivered under this section as it applies to an incorrect return or statement of a kind mentioned in any of the provisions specified in column 1 of Schedule 29.

696L.

Payment of tax

Petroleum production tax appropriate to a relevant period is due and payable on or before the day on which a company carrying on petroleum activities in a taxable field is required to deliver a return, under section 959I, for that relevant period.

696M.

 

Collection and general provisions

(1)The provisions of Part 41A relating to –

(a)assessments to corporation tax, and

(b)the collection and recovery of corporation tax,

shall apply in relation to petroleum production tax as they apply to corporation tax charged otherwise than under this Chapter.

(2)Section 1080 shall apply, with any necessary modifications, to any tax due and payable under this section as if it was an amount of corporation tax due and payable for the relevant period.

(3)

(a)Subject to paragraph (b), a company aggrieved by an assessment made on the company under this Chapter may appeal the assessment to the Appeal Commissioners, in accordance with section 949I, within the period of 30 days after the date of the notice of assessment.

(b)Where, in accordance with this section, a company is required to make a return and account for petroleum production tax to the Collector-General, no appeal lies against an assessment until such time as the company makes the return and pays or has paid the amount of the petroleum production tax payable on the basis of that return.

Part 24B

Council Regulation (EU) 2022/1854 of 6 October 2022[OJ L 261, 7.10.2022, p.1] as regards temporary solidarity contribution (ss. 697R-697U)

697R.

Interpretation

(1)In this Part –

“accounting period” means an accounting period determined in accordance with section 27;

“Act of 2023” means the Energy (Windfall Gains in the Energy Sector) (Temporary Solidarity Contribution) Act 2023;

“average taxable profits in respect of the reference years” shall be construed in accordance with section 697T(1);

“chargeable period” has the same meaning as it has in the Act of 2023;

“Council Regulation” has the same meaning as it has in the Act of 2023;

“energy company” has the same meaning as it has in the Act of 2023;

“relevant activities” has the same meaning as it has in the Act of 2023;

“taxable profits” shall be construed in accordance with section 697S(1);

“temporary solidarity contribution” has the same meaning as it has in the Act of 2023.

(2)A word or expression which is used in this Part and which is also used in the Council Regulation has, unless the context otherwise requires, the same meaning in this Part as it has in the Council Regulation.

697S.

Taxable profits for purposes of temporary solidarity contribution

(1)Subject to subsections (2) to (6), for the purpose of calculating the temporary solidarity contribution, taxable profits means so much of the total profits of the energy company for the accounting period, computed under section 76(3), that relate to relevant activities, reduced by –

(a)any charges on income paid by the company in the accounting period relating to relevant activities which are allowed as deductions against those total profits under section 243(2), and

(b)the amount of capital expenditure incurred on the construction or acquisition of a tangible asset –

(i)that is brought into use in the accounting period, where –

(I)the tangible asset is brought into use in any of the years 2018 to 2023, and

(II)the tangible asset is used in the course of carrying on relevant activities,

and

(ii)in respect of which allowances are made under Part 9 or Chapter 2 of Part 24.

(2)Where the tangible asset referred to in subsection (1)(b) ceases to be used in the course of carrying on relevant activities (except for reasonable periods of temporary disuse) at any time during the period of 5 years commencing on the day the tangible asset was first brought into use, then subsection (1)(b) shall not apply and the taxable profits for the accounting period in which the tangible asset was first brought into use shall be recalculated accordingly.

(3)Where a reduction may be made in the calculation of taxable profits for an accounting period under subsection (1)(b) (in this subsection referred to as the ‘first accounting period’) and the taxable profits for the first accounting period are less than zero, the taxable profits in the next accounting period shall be reduced by an amount determined by the following formula –

A-B

where –

Ais the amount of capital expenditure referred to in subsection (1)(b) in respect of the first accounting period, and

Bis the amount of taxable profits determined, in accordance with subsection (1) in respect of the first accounting period, as if subsection (1)(b) did not apply, but where that amount is less than zero, the amount shall be zero,

and the taxable profits in any subsequent accounting period shall be reduced in a like manner until the amount determined by the above formula has been exhausted.

(4)In ascertaining taxable profits for the purposes of subsection (1), no account shall be taken of any –

(a)relief under section 396(1) in respect of a loss incurred in the carrying on of a trade consisting of relevant activities in an accounting period that ends on or before 31 December 2017 or, where subsection (5)(a) applies, in a deemed accounting period that ends on 31 December 2017,

(b)relief under section 396(2), 396A(3) or 397(1) in respect of a loss incurred in the carrying on of a trade consisting of relevant activities in an accounting period that commences on or after 1 January 2024 or, where subsection (5)(b) applies, in a new accounting period that commences on 1 January 2024,

(c)amounts set off or surrendered under section 420 or 420A in an accounting period that falls wholly or partly within the period commencing on 1 January 2018 and ending on 31 December 2023,

or

(d)temporary solidarity contribution incurred under the Act of 2023.

(5)

(a)Where an energy company incurs a loss in the carrying on of a trade consisting of relevant activities in an accounting period that commences on or before 31 December 2017 and ends on or after 1 January 2018 (in this paragraph referred to as the ‘original accounting period’), then for the purposes of subsection (4)(a) –

(i)the accounting period of the company shall commence on the day on which the original accounting period began and shall be deemed to end on 31 December 2017 (in this section referred to as the ‘deemed accounting period’), and

(ii)the amount of the loss that shall be regarded as incurred in the carrying on of a trade consisting of relevant activities in the deemed accounting period shall be the amount determined by the following formula –

 

where-

Ais the amount of the loss incurred in the original accounting period,

Bis the length of the deemed accounting period, and

Cis the length of the original accounting period.

(b)Where an energy company incurs a loss in the carrying on of a trade consisting of relevant activities in an accounting period that commences on or before 31 December 2023 and ends on or after 1 January 2024 (in this paragraph referred to as the ‘original accounting period’), then for the purposes of subsection (4)(b) –

(i)the accounting period of the company shall commence on the day on which the original accounting period began and shall be deemed to end on 31 December 2023,

(ii)a new accounting period shall be deemed to commence on 1 January 2024 and shall be deemed to end on the day on which the original accounting period ends (in this section referred to as the ‘new accounting period’), and

(iii)the amount of the loss that shall be regarded as incurred in the carrying on of a trade consisting of relevant activities in the new accounting period shall be an amount determined by the following formula –

 

where –

Ais the amount of the loss incurred in the original accounting period,

Bis the length of the new accounting period, and

Cis the length of the original accounting period.

(6)

(a)For the purposes of calculating the temporary solidarity contribution, the taxable profits shall be calculated in respect of the calendar year and where an accounting period of an energy company falls wholly or partly within that calendar year, the amount to be included in the taxable profits for the calendar year with reference to that accounting period shall be determined by the following formula –

 

where –

Ais the taxable profits in respect of the accounting period,

Bis the length of the period common to the calendar year and the accounting period, and

Cis the length of the accounting period.

(b)The formula in paragraph (a) shall be applied to each accounting period that falls wholly or partly within the calendar year and the apportioned amounts shall be aggregated to determine the taxable profits in respect of the calendar year.

697T.

Average taxable profits for purposes of temporary solidarity contribution

(1)Subject to subsections (2) and (3), the average taxable profits in respect of the reference years, in relation to relevant activities carried on by an energy company, means –

(a)where the energy company commenced the relevant activities on or before 31 December 2018, the average annual taxable profits in respect of the years commencing on 1 January 2018 and ending on 31 December 2021,

(b)where the energy company commenced the relevant activities on or after 1 January 2019 but before 1 January 2020, the average annual taxable profits in respect of the years commencing on 1 January 2019 and ending on 31 December 2021,

(c)where the energy company commenced the relevant activities on or after 1 January 2020 but before 1 January 2021, the average annual taxable profits in respect of the years commencing on 1 January 2020 and ending on 31 December 2021, or

(d)where the energy company commenced the relevant activities on or after 1 January 2021 but before 1 January 2022, the taxable profits in respect of the year commencing on 1 January 2021 and ending on 31 December 2021,

and where the average taxable profits in respect of the reference years in accordance with paragraph (a), (b), (c) or (d), as the case may be, is less than zero, the average taxable profits in respect of the reference years shall be deemed to be zero.

(2)For the purposes of subsection (1), where in a year commencing on or after 1 January 2018 but before 1 January 2022, an energy company carried on relevant activities for part of a year only, the taxable profits in respect of that year shall be determined by the following formula –

A/B x 12

where –

Ais the taxable profits in the year, and

Bis the number of months in that year during which the relevant activities were carried on by the energy company.

(3)

(a)Where a company ceases to carry on relevant activities (in this subsection referred to as the ‘predecessor’) in the year commencing on 1 January 2022 or the year commencing on 1 January 2023, as the case may be, and another company begins to carry on those relevant activities (in this subsection referred to as the ‘successor’), for the purpose of determining the temporary solidarity contribution chargeable on the predecessor in the year in which the predecessor ceases to carry on the relevant activities, the average taxable profits in respect of the reference years for the predecessor shall be determined by the following formula –

 

where –

Ais the average taxable profits in respect of the reference years of the predecessor in relation to those relevant activities,

Bis the length of the period from the beginning of the year in which the predecessor ceases to carry on those relevant activities to the date the predecessor ceases to carry on those relevant activities, and

Cis the length of the year.

(b)Subject to paragraph (c), where the predecessor ceases to carry on relevant activities in the year commencing on 1 January 2022 or the year commencing on 1 January 2023, as the case may be, and the successor begins to carry on those relevant activities, for the purpose of determining the temporary solidarity contribution chargeable on the successor in respect of the year in which the successor commences to carry on the relevant activities, the average taxable profits in respect of the reference years for the successor shall be determined by the following formula –

 

where –

Ais the average taxable profits in respect of the reference years of the predecessor in relation to those relevant activities,

Bis the length of the period from the date the successor begins to carry on those relevant activities to the end of the year in which the successor begins to carry on those relevant activities, and

Cis the length of the year.

(c)Where the predecessor ceases to carry on relevant activities in the year commencing on 1 January 2022 and the successor begins to carry on those relevant activities in that year, for the purpose of determining the temporary solidarity contribution chargeable on the successor for the year 2023, the average taxable profits in respect of the reference years shall be the average taxable profits in respect of the reference years of the predecessor in relation to those relevant activities determined in accordance with this section and no apportionment shall be required under paragraph (b).

697U.

Deductibility of temporary solidarity contribution for corporation tax

(1)In computing the amount of the profits or gains to be charged to tax under Case I of Schedule D, a deduction shall be allowed in respect of the temporary solidarity contribution incurred by an energy company in an accounting period.

(2)No amount shall be deducted under subsection (1) if that amount has been allowed under any other provision of the Tax Acts.