It is necessary to look at the tax a company pays under the law
of its territory of residence to decide if that company is subject
to a lower level of taxation. From 16 March 1993 this must be less
than 75% of the corresponding United Kingdom tax. Before that date
the figure was 50%.
There is a rule for an accounting period that straddles 16
March 1993. It applies if the company would not have been subject
to a lower level of taxation before that because of the 50% limit.
The rule deems the accounting period to end on 15 March 1993 and a
new one to begin on 16 March 1993. The new 75% limit applies to the
new accounting period.
It may be that a company is already subject to a lower level
of taxation using the old 50% limit. In that case, there is no need
to change the accounting period.
