INTM230100 - Controlled Foreign Companies: Creditable Tax of a CFC: Introduction

바카라 사이트˜Creditable tax바카라 사이트™ is defined at TIOPA10/S371PA(1) as the aggregate of the following amounts:

  1. The amount of any double taxation relief for foreign tax which would be available against corporation tax on income under the rules in Part 2 of TIOPA 2010. This is calculated by applying the corporation tax assumptions in Chapter 19 of Part 9A which means that the CFC is assumed to be UK resident and treated as if it were liable to corporation tax for the purpose of computing its chargeable profits for the accounting period.
  2. UK income tax deducted at source from payments (for example, of interest) received by the CFC and included in its chargeable profits for the accounting period which would, on applying the corporation tax assumptions, be available for set-off against corporation tax under CTA10/S967.
  3. UK income or corporation tax actually charged in respect of income included or represented in the chargeable profits of the CFC in the accounting period. This will include corporation tax charged in respect of profits from a permanent establishment through which the CFC carries on a trade in the UK.
  4. The amount of any 바카라 사이트˜foreign CFC charge바카라 사이트™ paid in respect of income included or represented in the CFC바카라 사이트™s chargeable profits for the accounting period. A 바카라 사이트˜foreign CFC charge바카라 사이트™ means a charge under the law of a 바카라 사이트˜relevant foreign territory바카라 사이트™ which is similar to a CFC charge regardless of how it is named (TIOPA/S371PA(4)). Such foreign CFC charges may be paid by overseas companies which have a direct or indirect interest in the CFC, for example an overseas subsidiary of a UK resident company or an ultimate overseas parent that holds an indirect interest in a CFC through a UK resident holding company. This condition is intended to cover those circumstances where a CFC is subject both to the UK CFC rules and to similar rules of a third territory in invoking a CFC or similar charge to tax.

Foreign Taxes

For the purposes of computing its chargeable profits and creditable tax, a CFC is assumed to be resident in the UK (TIOPA10/S371SD - INTM239400). The company thus meets the general condition at section 26 of TIOPA 2010 that double taxation relief is available only to persons resident in the UK.

Foreign tax eligible for credit under Part 2 of TIOPA 2010 comprises both tax for which relief is due under the provisions of a double taxation agreement and tax qualifying for credit under the unilateral relief provisions in sections 9 to 17 of TIOPA 2010. Foreign tax is defined at TIOPA10/S371PA(2) as the 바카라 사이트˜local tax amount바카라 사이트™ or 바카라 사이트˜any tax under the law of a relevant foreign territory바카라 사이트™.

The local tax amount is an amount determined in accordance with step 2 of TIOPA/S371NB(1) and is the amount of tax which is paid in the CFC바카라 사이트™s territory in respect of the CFC바카라 사이트™s 바카라 사이트˜local chargeable profits바카라 사이트™ having taken into account any of the reductions to the local tax amount specified within TIOPA/S371NC (See INTM226100 and INTM226150) The CFC바카라 사이트™s local chargeable profits are its profits as determined for tax purposes under the law of the CFC바카라 사이트™s territory, ignoring any capital gains or losses.

Creditable tax includes taxes levied by political subdivisions of a country, for example, Swiss cantonal taxes, where these qualify for double taxation relief against United Kingdom taxes on income under the normal rules. Details of the foreign taxes regarded as qualifying for relief can be found under the relevant country heading in the Double Taxation Relief manual at onwards.

A 바카라 사이트˜relevant foreign territory바카라 사이트™ means a territory outside the United Kingdom other than the territory in which the CFC is resident for the accounting period.

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Amounts excluded

Where an amount which would otherwise be included within the total of creditable tax has been repaid or falls to be repaid, whether to a CFC or another person, the sum repaid is specifically excluded from the calculation of creditable tax (TIOPA10/371PA(5)).

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Computation of creditable tax

Foreign taxes are included in creditable tax subject to the normal double taxation relief rules applicable to UK resident companies. To the extent that foreign tax on any particular source of income exceeds the UK tax that would be due the creditable tax is therefore restricted under TIOPA10/S42.