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Controlled foreign companies: regulations

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The Controlled Foreign Companies (Excluded Territories) Regulations, SI 2012/3024, provide a list of excluded territories for the purposes of the excluded territories exemption (ETE), set out a further requirement for the ETE to apply, and provide a modified ETE exemption to apply in specified cases.

The Controlled Foreign Companies (Excluded Banking Business Profits) Regulations, SI 2012/3041, provide an exclusion from a CFC charge in relation to finance trading companies including banks, based on the level of capital held by those companies. ‘The general condition within the primary legislation refers to how much capital it would be reasonable for an independent company to hold. These regulations offer an alternative “safe harbour” for banks, based on a comparison between the capital held by the CFC and the capital held by the banking group of which the CFC is a member,’ HMRC said.

The Insurance Companies and CFCs (Avoidance of Double Charge) Regulations, SI 2012/3044, are intended to mitigate administrative compliance burdens for life insurance companies and prevent double taxation of life insurance companies under the CFC rules and TCGA 1992 s 212 in relation to investments in CFCs.

The Taxation (International and Other Provisions) Act 2010 (Part 7) (Amendment) Regulations, SI 2012/3045, ensure ‘the correct interaction’ of the debt cap rules in TIOPA 2010 Part 7 and the CFC rules in Part 9A.