I move Financial Resolution No. 9:
(1) THAT, the Corporation Tax Act, 1976, (No. 7 of 1976), shall, as respects distributions received by a person on or after the 29th day of January, 1992, be amended as follows—
(a) in Part IV by the insertion after section 66 of the following section—
"66A.—(1) In this section—
`the adjusted average relieved distribution', in relation to a relieved distribution received by a person from a company, means five-fourths of the average relieved distribution in relation to the relieved distribution received by the person from the company;
`the average relieved distribution', in relation to a relieved distribution received by a person from a company, means one-quarter of the total amount of relieved distributions received by the person from the company in the years 1987-88, 1988-89, 1989-90 and 1990-91;
`the relieved amount' means so much of a distribution to which section 64 applies as is determined by the formula—
where—
A is the amount of the distribution,
B is the amount of the tax credit in respect of the distribution, and
C is the standard rate per cent. for the purposes of section 88 (2) in respect of the year of assessment in which the distribution is made;
`the relieved distribution' has the meaning assigned to it in subsection (2);
`the relieving provisions' means sections 66 and 67 and paragraph (a) of subsection (4) of section 83.
(2) Notwithstanding any other provision of the Tax Acts—
(a) as respects distributions received by a person on or after the 29th day of January, 1992, for the purposes of determining his liability, if any, to income tax in respect of such distributions, and
(b) as respects distributions received by a person in the year 1987-88 and subsequent years of assessment, for the purposes of applying the provisions of subsection (3) to distributions received by the person on or after the 29th day of January, 1992,
so much of a distribution to which section 64 applies as is the relieved amount shall be treated as a separate distribution (hereafter in this section referred to, in particular, as `the relieved distribution') received by the person in respect of which he shall not be entitled to a tax credit, and the remainder, if any, of the distribution to which section 64 applies shall be treated as a separate distribution received by him in respect of which the tax credit shall be the tax credit in respect of the distribution to which section 64 applies.
(3) The relieving provisions shall not have effect as respects any distribution received by a person on or after the 29th day of January, 1992:
Provided that—
(a) as respects the year 1991-92, two-thirds of the lesser of—
(i) the total amount of relieved distributions received by a person from a company on or after the 29th day of January, 1992, and before the 6th day of April, 1992, or
(ii) the amount by which the adjusted average relieved distribution in relation to those distributions exceeds the total amount of relieved distributions, if any, received by the person from the company on or after the 6th day of April, 1991, and before the 29th day of January, 1992,
shall not be regarded as income for any of the purposes of the Income Tax Acts other than the purposes of section 54 of the Finance Act, 1974;
(b) two-thirds of so much of the total amount of relieved distributions received by a person from a company in the year 1992-93 as does not exceed the adjusted average relieved distribution in relation to those distributions, shall not be regarded as income for any of the purposes of the Income Tax Acts other than the purposes of the said section 54; and
(c) one-third of so much of the total amount of relieved distributions received by a person from a company in the year 1993-94 as does not exceed the adjusted average relieved distribution in relation to those distributions, shall not be regarded as income for any of the purposes of the Income Tax Acts other than the purposes of the said section 54.
(4) Where by virtue of this section the relieving provisions are not to apply to a distribution to which section 64 applies, then that distribution shall be ignored for the purposes of section 54 of the Finance Act, 1974:
Provided that where an amount representing relieved distributions is not to be regarded as income for any of the purposes of the Income Tax Acts by virtue of this section, other than the purposes of the said section 54, it shall not be so ignored.",
and
(b) in Part V by the insertion after section 76 of the following section—
"76A.—(1) In this section—
`the adjusted average distribution', in relation to a distribution received by a person from a company, means five-fourths of the average distribution in relation to the distribution received by the person from the company;
`the average distribution', in relation to a distribution received by a person from a company, means one-quarter of the total amount of distributions received by the person from the company in the years 1987-88, 1988-89, 1989-90 and 1990-91;
`distribution' means any distribution made out of income from exempted trading operations within the meaning of section 70;
`the relieving provisions' means subparagraph (i) of paragraph (a) of subsection (2) of section 76 and paragraph (a) of subsection (4) of section 83.
(2) Where a person receives any distributions on or after the 29th day of January, 1992, the relieving provisions shall not apply to those distributions:
Provided that this subsection shall not have effect in respect of—
(a) as respects the year 1991-92, two-thirds of the lesser of—
(i) the total amount of distributions received by a person from a company on or after the 29th day of January, 1992, and before the 6th day of April, 1992, or
(ii) the amount by which the adjusted average distribution in relation to those distributions exceeds the total amount of distributions, if any, received by the person from the company on or after the 6th day of April, 1991, and before the 29th day of January, 1992,
(b) two-thirds of so much of the total amount of distributions received by a person from a company in the year 1992-93 as does not exceed the adjusted average distribution in relation to those distributions, and
(c) one-third of so much of the total amount of distributions received by a person from a company in the year 1993-94 as does not exceed the adjusted average distribution in relation to those distributions.
(3) Where, by virtue of this section, the relieving provisions are not to apply to an amount representing distributions received by a person from a company, those distributions shall be disregarded for the purposes of section 54 of the Finance Act, 1974, to the extent of that amount.".
(2) IT is hereby declared that it is expedient in the public interest that this Resolution shall have statutory effect under the provisions of the Provisional Collection of Taxes Act, 1927 (No. 7 of 1927).
The purpose of Financial Resolution No. 9 is to wind up the tax-free status of certain dividends paid by exporting companies or companies located in Shannon Airport out of reserves of tax-free profits accumulated in the seventies and eighties. The tax exemption of export sales and Shannon Airport profits from corporation tax ended in April 1990. Since then the companies in question have had the full benefit of manufacturing relief which reduces their corporation tax to a rate of 10 per cent. Dividends paid out of 10 per cent profits are not tax-free — they are chargeable to tax. In these circumstances, it is inconsistent that companies benefiting fully from the 10 per cent scheme of corporation tax should be able to preserve indefinitely a capacity to pay tax-free dividends, long after the underlying corporation tax exemption has ended. Furthermore, instances have arisen where those tax-free dividends have been substituted in a contrived manner for normal taxable remuneration. Accordingly, the Government has decided to abolish, on a phased basis, the exempt status of dividends received out of export sales or Shannon Airport profits with effect on and from today.