INTM201080 - Controlled Foreign Companies: legislation - introduction and outline
Chargeable profits and creditable tax
Where a controlled foreign company is unable to satisfy any of
the exclusions and an apportionment under Chapter IV is due, a
computation of the controlled foreign company’s chargeable
profits and creditable tax (tax paid locally) for the accounting
period must be made. Chargeable profits do not include chargeable
gains but are otherwise computed in broadly the same way as profits
would be computed for Corporation Tax purposes if the company were
resident in the United Kingdom. However, some modifications to the
normal Corporation Tax rules are necessary because controlled
foreign companies are not in fact resident here. Guidance on the
computation of chargeable profits is in
INTM209000.
The creditable tax of a controlled foreign company consists
of:
- any foreign tax suffered on its income which would be eligible for double taxation relief if it were resident in the United Kingdom, plus
- any Income or Corporation Tax which it has paid either by deduction at source or on assessment (for example, on the profits of a branch in the United Kingdom).
See INTM209220.
