The government published various corporate tax reform proposals on 29 November. Comment here is confined to controlled foreign company (CFC) aspects of the proposals.
What’s proposed: longer‑term reforms
On CFCs a two stage process is still envisaged with interim improvements proposed for Finance Bill 2011 and longer‑term reforms in Finance Bill 2012. On the longer‑term reforms we have more detail on two particular aspects than on the wider regime. For the wider regime the proposal is for an entity based system which would impose a CFC charge only on profits which have been artificially diverted from the UK. There may yet be a whitelist-based exemption for specified jurisdictions which – if the scope is right – business would welcome.
Interest income: The first focus area is interest income. A ‘partial finance company exemption’ is proposed. In plumping for this approach the...
