The UK government has published its proposals for the reform of the Controlled Foreign Company (CFC) regime through a press release on 4 July 2011.
The government intends to modernize the CFC regime in 2012, which it expects will better reflect the way businesses operate in a globalized economy. These changes will include imposition of a CFC charge on artificially diverted UK profits, ensuring that UK activity and profits are fairly taxed. It will exempt foreign profits where there is no artificial diversion of UK profits; and ensure that profits arising from genuine economic activities undertaken offshore are not taxed.
The proposals also committed that by 2014 there will be a partial exemption for financing structures that will normally result in a 5.75% tax charge on the overseas profits made from intra-group financing activities.
