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 April, the European Commission ruled that UK's financing exemption under its Controlled Foreign Company regime was a type of state aid.
The Government has promised to radically simplify the tax system and reform taxes on profits collected overseas, under an overhaul of the controlled foreign company rules.
Under United Kingdom tax legislation, the profits of a foreign company in which a UK resident company owns a holding of more than 50% (known as a controlled foreign company, or CFC) are attributed to the resident company and subjected to tax in the UK, where the corporation tax in the foreign country is less than three quarters of the rate applicable in the United Kingdom.
The dividend cannot exceed the excess of all dividends received during the tax year from the controlled foreign company over the annual average for the base period years of 1) dividends received during each base-period year from the controlled foreign company; 2) amounts included in the U.S.
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.
And if it is successful, it will result in a considerable revenue loss for those member states that are relying on CFC legislation to remove distortions in the allocation of investment.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).
Changes to the 'controlled foreign company tax rules could encourage more companies to do likewise.
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.

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