I move:—
That Dáil Éireann approves each of the following Orders in draft:—
Double Taxation Relief (Sea or Air Transport) (Kingdom of Denmark) Order, 1955,
Double Taxation Relief (Sea or Air Transport) (Kingdom of Norway) Order, 1955,
Double Taxation Relief (Sea or Air Transport) (Kingdom of Sweden) Order, 1955,
a copy of each of which Orders in draft was laid on the Table of Dáil Éireann on the 11th day of May, 1955.
On the 18th October, last year, I signed here in Dublin, on behalf of the Government, three agreements with the Governments of Denmark, Norway and Sweden, respectively, for the avoidance of double taxation on income derived from the business of sea and air transport. These agreements are not yet in force. They were signed subject to ratification, and will come into operation upon the exchange of instruments of ratification.
Before, however, the Government are in a position to ratify them, the Government must make an Order, in accordance with the provisions of Section 15 of the Finance Act, 1951 (No. 15 of 1951), to confirm and give the force of Irish law to each of the agreements. Section 15 of that Act furthermore lays down that, before the Government can make any such Order, a draft of the Order must have been laid before this House and a resolution passed approving the Order in draft.
Drafts of the Orders to give effect to the agreements in Irish law were laid on the Table of the House on the 11th May. Deputies will find the text of each agreement scheduled to the appropriate draft Order. The three agreements are, except in one or two minor points, identical in their terms.
The purpose of the agreements is set out clearly and concisely in Article 2, which reads as follows:—
(1) All income derived from the business of sea or air transport between Ireland and other countries by Swedish (or Norwegian or Danish, as the case may be) undertakings engaged in such business shall be exempt from income-tax and all other taxes on profits which are chargeable in Ireland.
(2) All income derived from the business of sea or air transport between the Kingdom of Sweden (or the Kingdom of Denmark or the Kingdom of Norway, as the case may be) and other countries by Irish undertakings engaged in such business shall be exempt from income-tax and all other taxes on profits which are chargeable in the Kingdom of Sweden (or the Kingdom of Denmark or the Kingdom of Norway, as the case may be).
The exemption which will be accorded to Swedish, Danish and Norwegian undertakings under the agreements, will cover income-tax (including surtax) and corporations profits tax and also any other tax on income which might be imposed in the future in this country. Irish undertakings will be exempt from equivalent taxes on income in Sweden, Denmark and Norway.
Article 1 contains definitions of "Irish undertakings", "Swedish undertakings" or "Norwegian or Danish undertakings" as the case may be, and "the business of sea or air transport". The meaning of these definitions is clear. There are just two points to which I should like to draw attention:—
(1) First, trading by the State as well as trading by private individuals and companies is covered in the definition of "undertakings".
(2) Secondly, in the case of corporations, exemption is limited to corporations constituted under the laws of Ireland and managed and controlled in Ireland, so that the benefits of the agreements will flow only to bona fide Irish enterprises which have their head office and central administration in the State. Likewise, only bona fide Swedish, Norwegian and Danish corporations will enjoy exemption from double taxation under the agreements.
Article 3 provides for the coming into force of the agreements and for the termination of the three existing agreements which were concluded with the Governments of Norway, Sweden and Denmark in the early 1930s, but which only related to reciprocal exemption from double income-tax on income derived from shipping business. Article 3 also provides that the agreements with Norway and Sweden will have effect in respect of income earned since the 1st January, 1954, and the agreement with Denmark in respect of income earned since the 1st January, 1951.
Article 4 states, in each case, that the agreement may be terminated by either party by giving six months' notice in writing to the other party.
I have just mentioned that we have had for over 20 years agreements with the Governments of Denmark, Norway and Sweden for the avoidance of double taxation on income derived from shipping business. In a sense, therefore, the new agreements may be regarded as a normal extension of the existing agreements to bring them into line with the development and expansion of air transport. At the moment, there are no scheduled air services operating between this country and Denmark, Norway or Sweden, but I think there will be general agreement that it is desirable in principle to encourage direct transport of passengers and goods between Ireland and other countries by affording relief from double taxation to companies which are engaged in transport business.
Negotiations which, I hope, will lead to agreements of a similar kind have been opened with a number of other countries; and, of course, the comprehensive Double Income Tax Relief Agreements which we have concluded with Britain and the United States of America—as well as the recent one with Canada which remains to be ratified— all contain provisions for reciprocal exemption from double taxation on income derived from the business of sea and air transport.