Rook Consultants Limited

Corporation tax issue – Alternative Minimum Tax for loss making companies

Welcome to our newsletter which focuses on the issue of alternative minimum tax for loss making companies.

In the 2008 Finance Act, the Income Tax Act was amended to introduce a tax of 0.3% of turnover, on companies making perpetual tax losses. The amendment was to come into effect from January 2009. When the tax was introduced, the then Minister for Finance indicated that the Alternative Minimum Tax (“AMT”) at the rate of 0.3 percent of turnover was to be imposed on corporate entities making a loss for three consecutive years. According to the Minister such corporate entities made commercial profits but due to tax adjustments they recorded losses on account of generous investment incentives that were provided in the legislation including accelerated capital deductions and investment allowances.

It would therefore seem that the initial target for imposing the AMT was for loss making companies that were making tax losses as a result of tax incentives.

Attachment: attachment Rook_Consultants_May_2014_Newsletter_-_Alternative_minimum_tax_for_loss_making_companies.