This section defines " secretary " for the purposes of this part. The income tax definition has, however, been extended to include in the case of a non-resident company the agent, manager, factor or other representative of the company.
SECTION 154.
Question proposed: " That section 154 stand part of the Bill."
I raised the question of non-resident companies previously and I am still not quite clear about them. How do we recognise such company? Is there a possibility that a non-resident company may have people pursuing activities here which are not recorded in Ireland?
They may be trading with Ireland, in which case it does not give rise to liability. If it is trading in the country—of course, it could be trading here, as indeed Irish residents can, and not come to the notice of the Revenue Commissioners, it could be leaving itself open to penalties.
How do the Revenue Commissioners know when a company is or is not trading in Ireland?
No claim has been made that this law will give the Revenue Commissioners total control of the situation. There may well be trading activities or businesses which are outside their ken because they are not known to them. But, of course, there would be failure on the part of people who have a liability to tax if they did not make known their activities.
Take an agent working in Ireland for English products. The agent would, of course, be liable to pay income tax on his income, but would not the parent company also be liable to corporation profits tax on their profits?
If the company was trading here by means of an agency or branch, yes.
If it did not have a branch, only an agent?
If its agent was simply a transmitting agent to enable it to trade with this country, then it would not give rise to the liability.
It would not?
No.
That is a loophole.
Apart from this Bill, a non-resident company must register under the Companies Act.
A lot of them do not, unfortunately.
What steps can you take to ensure that companies do register?
Penalise them when we discover they have not. That is about all we can do.
That seems to be running contrary to the principle of qui facit per alium facit per se, where a foreign company has an agent here, a distinct individual, doing its business and picking up business for it, that foreign company is virtually trading here. It just does not happen to have an office. It might have somebody in suburbia who signs their contracts and is getting business for them. This is a very grey area.
It is very difficult to have a universal definition which would say clearly whether a company was trading in or trading with. It would be very difficult to be precise in borderline cases.
Is the simple answer not that if the property transfers in the trading item to the person here, then it is merely trading with the country but if the company goes further and says to Deputy Collins who, we will say for the sake of argument is their agent, to arrange for trade or business transferred to the country, surely that company is trading in this country?
Yes, that is a clear black-and-white situation if the agent makes the contracts here. There is no room for doubt there. Section 201 of the Income Tax Act, 1967, provides that:
A non-resident person shall be assessable and chargeable in respect of any profits or gains arising, whether directly or indirectly through or from any factorship, agency, receivership, branch or management and shall be so assessable and chargeable in the name of the factor, agent, receiver, branch or manager.
That does not take us much further in clearing up the areas of doubt.
That is only in relation to income tax. Have we got the same situation arising in so far as corporation tax profits are concerned?
It applies.
Question put and agreed to.