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Legal Terms - controlled foreign company
Corporation tax is levied on a UK company for profits made by a "controlled foreign company" (CFC), restricting the capacity of a transnational group of enterprises to enjoy profit without any payment to UK tax. The Finance Act 2012 sch 20 updated the definition of a CFC and the process for accomplishing this goal. A firm that is not based in the UK but is under the management of people or businesses who do is known as a CFC. If a CFC's profits fall into what the Act refers to as the "business profits gateway" or the "financial profits gateway," the corporation's UK-resident corporate owners will be responsible for paying the taxes (not the individuals who own the business). In general, these are defined with the aim of charging profits that, in the absence of tax planning techniques, may have been expected to have generated in the UK on a commercial basis. Because it is recognized as a controlled foreign corporation, a subsidiary operating in a tax haven that uses the assets of its UK parent is likely to have its profits assessed against the parent.
A charge to *diverted profits tax, which is levied at a higher rate, may occur in cases when foreign profits are not included in the UK tax net by the CFC legislation.
Corporation tax is levied on a UK company for profits made by a "controlled foreign company" (CFC), restricting the capacity of a transnational group of enterprises to enjoy profit without any payment to UK tax. The Finance Act 2012 sch 20 updated the definition of a CFC and the process for accomplishing this goal. A firm that is not based in the UK but is under the management of people or businesses who do is known as a CFC. If a CFC's profits fall into what the Act refers to as the "business profits gateway" or the "financial profits gateway," the corporation's UK-resident corporate owners will be responsible for paying the taxes (not the individuals who own the business). In general, these are defined with the aim of charging profits that, in the absence of tax planning techniques, may have been expected to have generated in the UK on a commercial basis. Because it is recognized as a controlled foreign corporation, a subsidiary operating in a tax haven that uses the assets of its UK parent is likely to have its profits assessed against the parent.
A charge to *diverted profits tax, which is levied at a higher rate, may occur in cases when foreign profits are not included in the UK tax net by the CFC legislation.
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