Are we taking amendments Nos. 2 and 3 together?

Yes. I move amendment No. 2:

In page 17, subsection (3), line 41, to delete "payable in the State".

This amendment preserves the present position which is that in computing trading income a deduction may be made in respect of annual interest, whether the interest is payable in the State or is payable abroad. Amendment 3 reads:

In page 18, between lines 12 and 13, to insert a new subsection as follows:

" (8) The provisions of section 64 (1) of the Income Tax Act, 1967, shall not apply in computing income from a trade.".

Section 64 (1) of the Income Tax Act, 1967, provides that corporation profits tax paid by a company in respect of an accounting period is to be deducted as an expense in computing the profits or gains of the company. This method of computation secures that the combined charge for income tax and corporation profits tax is approximately 40 per cent on the first £2,500 of profits and approximately 50 per cent on the profits above £2,500. Under the corporation tax system, tax will be charged on a company's profits at a rate equal to the combined effective rate of income tax and corporation profits tax. The deduction of any amount of corporation profits tax in computing profits chargeable to corporation tax would, therefore, be incorrect and the amendment provides that such a deduction is not to be made.

On amendment No. 2, was the inclusion of those words " payable in the State" merely an oversight? Was there any other motive?

No.

On amendment No. 3, may we take it that the net effect of adopting that amendment is to make the position exactly the same as it is at present?

Yes.

Is there any divergence?

No material divergence.

What is the material variation?

I think it is .04 per cent.

What does it mean? I take it that .04 is a percentage of taxation? What change arises by virtue of this section?

The change arises not by virtue of this section but by the combination of both income tax and corporation profits tax.

The actual effect is virtually the same?

Yes.

I move amendment No. 3:

In page 18, between lines 12 and 13, to insert a new subsection as follows:

" (8) The provisions of section 64 (1) of the Income Tax Act, 1967, shall not apply in computing income from a trade.".

The only thing that occurs to me is that although the Minister is valiantly attempting to consolidate into one Act corporations tax and income tax, he still finds himself with a large body of income tax law which has to be invoked and applied. In other words, both taxes are being lumped together for the one assessment, a system has been arrived at where an assessment can be made at a single rate but almost all the rules and complexities in Schedules, where they apply, of the income tax code are imported into this Bill. This Bill therefore, cannot be read except in conjunction, and very close conjunction with the Income Tax Act. May I give notice here of a question on section 21, which lists out Consolidation Acts and incorporations? Would the Minister be in a position to furnish us with details of what is not covered, of what is left out?

Nothing.

Omissions can act in a very positive way when it comes to income tax law.

Section 21 deals with capital allowances.

Yes but there is a list of Acts there too. It is very difficult to see what changes are actually made in principle, not so much in the actual financial law, but then, in our moderate experience, the Minister has a way of varying that particular burden, usually in the one direction, which is a very simple manoeuvre. What one is interested in is what controls where the burden lies?

I made some observations on the wording of section 10 (4) (b). If there is any validity in what I said it applies also to subsection (5) of this section. Perhaps if the Minister is having the previous matter looked at, he could relate it also to subsection (5) of this section.

I will do that.

May I refer to subsection (4) where the Minister deals with computing a company's income for the accounting period on the letting of rights to work minerals in the State? I notice the words used are "letting of rights". What about the position in respect of licensing of rights? Is there any particular reason for omitting the licensing of rights? Basically, these matters start with licensing of rights before the matter of substantive letting is gone into. A fair amount of expense is incurred in the early stages just as if there was a letting. Would the Minister have a look at that?

Certainly, I will have a look at it.