(1) Schedule 24 to the Principal Act is amended -

(a) in paragraph 4(2A) (inserted by the Finance Act 2006) by substituting "foreign tax in respect of any income of a company (in this subparagraph referred to as 'that income'), being income (other than income from a trade carried on by the company through a branch or agency in a territory other than the State) which is taken into account" for "foreign tax in respect of any income of a company (in this subparagraph referred to as 'that income'), being income which is taken into account", and

(b) by inserting the following after paragraph 9G (inserted by the Finance Act 2006):

 "9H. Dividends paid out of transferred profits

(1) This paragraph applies in any case where -

(a) under the law of a territory outside the State, tax is paid by a company (in this paragraph referred to as the 'first company') resident outside the State in respect of any of its profits,

(b) some or all of those profits become profits of another company (in this paragraph referred to as the 'second company') resident outside the State otherwise than by virtue of the payment of a dividend to the second company, and