(1) Part 20 of the Principal Act is hereby amended in Chapter 1 -

(a) in section 616(1) -

(i) by the substitution for "of this Part" of "of this Chapter", and

(ii) by the substitution for paragraphs (a) to (c) of the following paragraphs:

"(a) subject to section 621(1), a reference to a company or companies shall apply only to a company or companies, as limited by subsection (2), being a company or, as the case may be, companies -

(i) where the reference is in this section, which, by virtue of the law of a Member State of the European Communities, is or are resident for the purposes of tax in such a Member State, and for this purpose 'tax', in relation to a Member State of the European Communities other than the State, means any tax imposed in the Member State which corresponds to corporation tax in the State, and

(ii) where the reference is in the following sections of this Chapter, which is or are resident in the State,

and references to a member or members of a group of companies shall be construed accordingly;

(b) a company is an effective 75 per cent subsidiary of another company (in this paragraph referred to as 'the parent') at any time if at that time -