The Principal Act is amended -

(a) by the insertion of the following section after section 76D:

"76E. Computation of profits and gains: deductions for interest paid by qualifying financing companies

(1) In this section -

‘arrangements’, other than in paragraph (b)(ii) of the definition in this subsection of ‘qualifying subsidiary’, includes any agreement, understanding, scheme, transaction or series of transactions (whether enforceable or not);

‘associated enterprise’, in respect of a company, means an enterprise that is an associated enterprise of that company for the purposes of Chapter 4 of Part 35C;

‘control’ shall be construed in accordance with section 432;

‘EEA state’ means a state, not being a Member State or the State, which is a contracting party to the Agreement on the European Economic Area signed at Oporto on 2 May 1992 as adjusted by the Protocol signed at Brussels on 17 March 1993;

‘enterprise’ has the same meaning as in Part 35C;

‘external interest’ means the amount of interest payable on an external loan;

‘external loan’, subject to subsection (11), in respect of a company, means a loan from a person who -

(a) does not have the beneficial ownership of, or the ability to control, directly or through the medium of a connected company or connected companies or by any other indirect means, more than 5 per cent of the ordinary share capital of the company, and

(b) is not an associated enterprise of the company;