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Special Committee Corporation Tax Bill, 1975 debate -
Tuesday, 2 Mar 1976

SECTION 177.

Question proposed: " That section 177 stand part of the Bill."

This section is concerned with interest on permanent loans which hitherto under the old system of income tax and corporation profits tax, is not deductible in computing for purposes of corporation profits tax the profits of the borrowing company, and, because of this, is not charged to corporation profits tax in the hands of the lending company. The borrowing company has always had the right to deduct income tax when paying such interest, so that the lending company bears income tax thereon. In the corporation tax system such interest will be an allowable deduction in computing the borrowing company's profits. However, in relation to interest paid under loan agreements entered into before the date of circulation of the Bill—November 27th, 1975—the lending company's liability to corporation tax will, in effect, under the section, be reduced to an amount computed at the standard rate of income tax. The lending company's present position will thus be preserved in relation to existing loans.

Question put and agreed to.
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