PART XVII TAX AVOIDANCE

C1C2C3CHAPTER IV CONTROLLED FOREIGN COMPANIES

Annotations:
Modifications etc. (not altering text)
C1

Pt. XVII Ch. IV (ss. 747-756) modified (27.7.1993) by 1993 c. 34, s. 119(3)

750 Territories with a lower level of taxation.

M11

Without prejudice to F3subsection (5) of section 749, a company which, by virtue of F4any of subsections (1) to (4) of that section, is to be regarded as resident in a particular territory outside the United Kingdom shall be considered to be subject to a lower level of taxation in that territory if F8, after giving effect to subsections (1A) and (1B) below, the amount of tax (“the local tax”) which is paid under the law of that territory in respect of the profits of the company which arise in any accounting period is less than F1three-quarters of the corresponding United Kingdom tax on those profits.

F91A

If in the case of that accounting period there is any income, or any income and any expenditure, of the company—

a

which is brought into account in determining the profits of the company in respect of which tax is paid under the law of that territory, but

b

which does not also fall to be brought into account in determining the chargeable profits of the company,

the local tax shall be treated for the purposes of this Chapter as reduced to what it would have been had that income and any such expenditure not been so brought into account.

1B

If—

a

under the law of that territory any tax (“the company's tax”) falls to be paid by the company in respect of profits of the company arising in that accounting period,

b

under that law, any repayment of tax, or any payment in respect of a credit for tax, is made to a person other than the company, and

c

that payment or repayment is directly or indirectly in respect of the company's tax,

the local tax shall be treated for the purposes of this Chapter as reduced (or further reduced) by the amount of that payment or repayment.

2

For the purposes of this Chapter, the amount of the corresponding United Kingdom tax on the profits arising in an accounting period of a company resident outside the United Kingdom is the amount of corporation tax which, on the assumptions set out in Schedule 24 and subject to subsection (3) below, would be chargeable in respect of the chargeable profits of the company for that accounting period.

3

In determining the amount of corporation tax which, in accordance with subsection (2) above, would be chargeable in respect of the chargeable profits of an accounting period of a company resident outside the United Kingdom—

F5a

it shall be assumed for the purposes of Schedule 24 that an apportionment under section 747(3) falls to be made as regards that period; and

b

there shall be disregarded so much of any relief from corporation tax in respect of income as would be attributable to the local tax and would fall to be given by virtue of any provision of Part XVIII F6. . . ; and

c

there shall be deducted from what would otherwise be the amount of that corporation tax—

i

any amount which (on the assumptions set out in Schedule 24) would fall to be set off against corporation tax by virtue of section 7(2); and

ii

any amount of income tax or corporation tax actually charged in respect of any of those chargeable profits.

4

The references in subsection (3)(c) above to an amount falling to be set off or an amount actually charged do not include so much of any such amount as has been or falls to be repaid to the company whether on the making of a claim or otherwise.

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