Controlled foreign corporation

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Controlled foreign corporation (CFC)

A foreign corporation whose voting stock is more than 50% owned by US stockholders, each of whom owns at least 10% of the voting power.

Controlled Foreign Corporation

A company registered in and regulated by a foreign country that has at least 50% American ownership. Setting up a corporation in a foreign country may have tax advantages; for example, a country may encourage companies to register in it by having no corporate tax. The IRS works within the context of foreign treaties to determine how earnings from controlled foreign corporations are taxed in the United States.
References in periodicals archive ?
In his recent Autumn Statement, the Chancellor announced a proposal to strengthen the Controlled Foreign Company rules, which will be put to Parliament in the 2014 Finance Bill.
Richard Fenton The Chancellor confirmed that he would modernise the Controlled Foreign Company legislation, to take effort from 1 January 2013, with draft legislation previously issued simplified further to address companies' needs for simpler administration of this complex legislation.
Dixons, Kingfisher and Carphone Warehouse all saw their shares fall as they revealed how changes to Controlled Foreign Company legislation would hit home.
FEE's newly-released position paper on Controlled Foreign Company Legislations in the EU consists of a comprehensive study of tax laws regarding Controlled Foreign Companies (CFC), and it considers how CFC rules are structured and applied by individual EU Member States.
A further update on the controlled foreign company legislation (anti-avoidance legislation aimed at taxing in the UK, profits that have been artificially diverted from the UK to an overseas country).
This is clearly illustrated by the announcement in the PBR to introduce changes to the way in which the UK taxes income of certain overseas subsidiaries of UK groups - the so called Controlled Foreign Company provisions.
These raised tax through tightening the controlled foreign company and double tax relief rules, as well as introducing disallowance of interest expense in certain multinational investment structures.

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