Finance Act 1996

4 (1) Schedule 25 to the Taxes Act 1988 (cases excluded from direction-making powers) shall be amended as follows. U.K.

(2) In paragraph 2 (acceptable distribution policy)—

(a) in sub-paragraph (1)(d) (amount of the dividend etc paid to persons resident in the United Kingdom) for “50 per cent. of the company’s available profits” there shall be substituted “ 90 per cent. of the company’s net chargeable profits ”;

(b) in sub-paragraph (6) (computation of appropriate portion of profits in cases where there are two classes of issued shares) in the definition of “X”, for “available profits” there shall be substituted “ net chargeable profits ”.

(3) In paragraph 2A (further provisions to determine whether a controlled foreign company which is not a trading company pursues an acceptable distribution policy)—

(a) in sub-paragraph (1) (application) the words “which is not a trading company” shall be omitted;

(b) in sub-paragraph (5)(c) (which modifies the definition of “X” in paragraph 2(6) for certain purposes) for “available profits” there shall be substituted “ net chargeable profits ”;

(c) sub-paragraphs (6) and (7) (which are superseded by amendments made to paragraph 2 by this Schedule) shall be omitted.

(4) In paragraph 3 (“available profits” and “net chargeable profits” for purposes of Part I of the Schedule)—

(a) sub-paragraphs (1) to (4) (ascertainment of “available profits”) shall be omitted;

(b) in sub-paragraph (5) (certain dividends to be left out of account in determining available profits or, where the company is not a trading company, chargeable profits) the words “the available profits or, where the company is not a trading company,” shall be omitted.

(5) In paragraph 6 (exempt activities) in sub-paragraph (2)(b) (less than 50 per cent. of gross trading receipts from wholesale, distributive or financial business to be derived from connected or associated persons) after “connected or associated persons” there shall be added “ or persons who have an interest in the company at any time during that accounting period. ”

(6) In paragraph 16(2) (reductions in United Kingdom tax: extended meaning of “transaction” in paragraphs 17 and 18)—

(a) in paragraph (a), after “transaction” there shall be inserted “ the results of which are ”; and

(b) in paragraph (b), for “two or more such transactions taken together” there shall be substituted “ two or more transactions taken together, the results of at least one of which are so reflected ”.