Corporate Tax Reform - Controlled Foreign Company Rules

The long anticipated document entitled "Corporate Tax Reform" was published by the Government on 29 November 2010. The document outlines the intended changes to the corporate tax system over the next 5 years to deliver a more competitive and stable tax system. The document also deals with the most significant areas for reform – the much criticised controlled foreign company ("CFC") rules, the foreign branch profits exemption and the treatment of intellectual property rights.

In summary the main principles behind the roadmap are to prioritise rate reductions (with the main rate of corporation tax reduced to 24% by April 2014) over broadening tax reliefs. In addition, the intention is to move towards a more territorial corporate tax system focussing more on profits from UK activities and aiming to simplify the tax legislation, avoiding unnecessary changes and complexity.

Read more on the detailed proposals here.

Lawyers Nikol Davies