In eBrief No. 34/09, Revenue have announced a new practice in relation to the waiver of Interest on the underpayment of Preliminary Corporation Tax where the underpayment arose solely due to movements in the Exchange Rate of the Functional Currency.

This is a welcome development and the practice will apply in respect of preliminary tax payments made after the publication of the eBrief.

According to the eBrief, in order for the practice to apply, the following conditions must be satisfied:

“All requirements of section 958 TCA 1997 in relation to the minimum amount payable as an:

• initial instalment of preliminary tax
• final instalment of preliminary tax
• relevant initial balance or
• relevant final balance

would have been satisfied if those requirements had been applied by reference to:

• the corporation tax being a functional currency amount, that would have been due if the corporation tax were to be computed as a percentage of the functional currency profits, and
• the functional currency values that were equivalent to the euro payments actually made by the company (see next paragraph).

For the purposes of applying this condition, the functional currency values equivalent to the euro payments actually made are to be determined by reference to the representative rate of exchange (within the meaning of section 402(1) TCA 1997) for either the day on which the payment was made or the most recent day, for which such a rate was recorded, before the day of payment.

• The company makes a written claim, providing full details of both the functional currency values and euro values of all corporation tax due and corporation tax payments made by it for the accounting period and the rates of exchange used, to the Collector General's Division within one month of the notification of the interest charge. The officer to whom the claim should be directed will be named on the interest notification.”

eBrief No. 34/09 is reproduced at Section 2.04.