A company which fells and extracts trees from Irish forests was held by the High Court yesterday to be engaged in a "process for the manufacture of goods" which therefore qualifies it for a reduced rate of corporation tax (10 per cent).
Ms Justice Carroll upheld a Circuit Court finding in favour of Longford Timber Contractors Ltd (LTCL) and rejected a claim by the Revenue Commissioners that the company was not entitled to the reduced rate of tax.
The judge had been asked to decide whether the company qualified for the reduced tax rate which applies to companies carrying out a process of manufacture of goods. She said it was agreed between the parties that the company provided a service to a sawmill, Glennon Brothers Ltd, which bought trees from Coillte.
The trees were cut to specified lengths, debranched and brought to a roadside for collection.
Ms Justice Carroll said the technology employed by LTCL achieved cuts of an exact length and dimension out in the wood instead of, as heretofore, in the sawmill.
What happened out in the wood was part of the production-line process carried out in a different location and not, as heretofore, in the mill. Delivering such a product was not just a matter of convenience for either party but was a product of added value.
An adequately informed onlooker watching LTCL's activity in the woods would see not just cutting and stripping in an unplanned, mixed up way, but it being done in a precisely measured way, preordained by computer (in the machines) to obtain exact dimensions to order.
Ms Justice Carroll held that LTCL qualified for the reduced rate of corporation tax as a consequence of being engaged in a process of manufacture of goods in accordance with Section 433 of the 1997 Taxes Consolidation Act.