697LA Transactions between associated persons and between tonnage tax trade and other activities of same company.

(1) In this section—

“control” shall be construed in accordance with section 11;

“losses” includes amounts in respect of which relief may be given in accordance with section 83(3) and Part 12; “transaction” includes any agreement, arrangement or understanding of any kind (whether or not it is, or is intended to be, legally enforceable).

(2) Where—

(a) provision is made or imposed as between a tonnage tax company and another company by means of a transaction,

(b) the results of the transaction are taken into account in computing the tonnage tax company’s relevant shipping income,

(c) at the time of the transaction—

(i) one of the companies is directly or indirectly under the control of the other, or

(ii) both of the companies are, directly or indirectly, under the control of the same person or persons,

and

(d) the relevant shipping income of the tonnage tax company is greater than it would be if the parties to the transaction had been independent parties dealing at arm’s length,

then, the income or losses of both companies shall be computed for any purpose of the Tax Acts as if the consideration in the transaction had been that which would have obtained if the transaction had been a transaction between independent persons dealing at arm’s length.

(3) Subsection (2) shall apply in relation to a tonnage tax company where provision is made or imposed as between the company’s tonnage tax trade and other activities carried on by the company as if—

(a) that trade and those other activities were carried on by two different persons,

(b) those persons had entered into a transaction, and

(c) the two persons were both controlled by the same person at the time of the making or imposition of the provision.

(4) A company to which subsection (2) or (3) applies shall keep for a period not less than 6 years sufficient documentation to prove how prices and terms have been determined in a transaction to which that subsection applies, including a written and detailed explanation of the pricing principles it has applied in relation to any such business transaction.

(5) An officer of the Revenue Commissioners may by notice in writing require a company to which subsection (2) or (3) applies to furnish him or her with such information, particulars or documentation as may be necessary for that officer to establish whether or not the company has complied with this section.

(6) Section 1052 shall apply to a failure to comply with subsection (5) as it applies to a failure to deliver a return referred to in that section.

(7) Sections 900 and 901 shall apply to records under this section as if they were books, records or documents within the meaning of section 900.

(8) Nothing in this section is to be construed as affecting the computation of a company’s tonnage tax profits.