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CFC Reform Proposals

Speed Read: The recently published discussion document proposes a new CFC regime which will focus on artificial diversion of UK profits. Objective exemptions will exclude companies where there is a low risk of diversion and there will be a new motive test. Profits from trading activities including group treasury operations and actively managed IP should be exempt. There is a new presumption that excess cash belongs in the UK meaning that where it is held offshore it will be taxed under the new regime. Group finance companies will only be exempt if appropriately funded although if not a UK taxable return will be imputed by reference to excess equity funding.
After more than four years of discussion a document setting out proposals for reforming the controlled foreign company ('CFC') rules was...

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