F1PART 9AControlled foreign companies
Annotations:
Amendments (Textual)
Chapter 13The low profit margin exemption
371MBThe basic rule
1
The low profit margin exemption applies for a CFC's accounting period if the CFC's accounting profits for the period are no more than 10% of the CFC's relevant operating expenditure.
2
In this section references to the CFC's accounting profits are to those profits as determined before any deduction for interest.
3
The CFC's “relevant operating expenditure” is its operating expenditure brought into account in determining its accounting profits for the accounting period, excluding—
a
the cost of goods purchased by the CFC, other than goods used by the CFC in the territory in which it is resident for the accounting period, and
b
any expenditure which gives rise, directly or indirectly, to income of a person related to the CFC.
Pt. 9A inserted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 20 para. 1 (with ss. 56-58)