INTM203090 - Controlled Foreign Companies: exemptions - excluded countries

Branch and agency income

SI1998/3081 Regulations 5(3)(e) and 6

Subject to SI1998/3081 regulation 6(2), where the controlled foreign company has a branch or agency outside its territory of residence the net income or gains that arise in or are derived from that branch or agency will be treated as non-local source income. The net amount means the amount of income or profits after deduction of expenses but before tax as determined in accordance with a generally accepted method of accounting for profits of branches or agencies. The net amount as a measure of those profits does not, however, apply where the gross income in INTM203070 (a), (b), (c) and (d) in total exceeds the net amounts of the branch or agency. In that case the aggregate of the gross amounts will be the measure of the income of the branch or agency. See the examples at INTM203140.