I move: (1) That in paragraph (1) of Rule 7 of the Miscellaneous Rules applicable to Schedule D of the Income Tax Act, 1918, for the words "any foreign or colonial company, society, adventure, or concern" there shall be substituted the words "any body of persons not resident in the State". (2) It is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
Financial Resolutions. - Financial Resolution No. 3: Income Tax.
What does this Resolution mean?
It affects merely the tax chargeable on dividends from a non-resident company as against a resident company. A non-resident company is chargeable to Irish income tax only on income arising in this country and cannot deduct Irish tax on the payment of interest or dividends. The intention here is that where interest or dividends are paid by a non-resident company to persons resident in this country, Irish tax should be deducted on encashment by the bank or other institution to which the warrants are presented for payment.
The Rule, however, speaks of interest, dividends, etcetera paid by "any foreign or colonial company, society, adventure or concern", and, on this wording, deduction is not authorised in the case of payments by a company incorporated in this country but resident abroad; in other words, where the effective management is in this country.
Resolution put and agreed to.