International: Tax bodies urge caution on CFCs
New CFC rules that are 'too tough' may deter groups from having a UK holding or intermediate company the CIOT has warned. 'Although moving the head office of a quoted company is not easy we have seen instances of this happening recently and this trend could gather momentum ' it said.
The tax body recognised that the Government has 'a reasonable motive' for trying to prevent erosion of part of the UK tax base by 'excessive deductions for interest and intellectual costs (many of which are intragroup) and to some extent from diversion of active business from the UK'. But going too far on this latter aspect 'introduces the issue of disincentivising companies from being headquartered here'.
Outline proposals for reform published in January 2010 were a great improvement on the June 2007 consultation document ...
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