A Controlled Foreign Company(CFC)is a company set up to do business in a foreign jurisdiction by a multinational company(MNC).There is a tendency among the MNCs to erode the tax base and shift profits to no-or low-tax...A Controlled Foreign Company(CFC)is a company set up to do business in a foreign jurisdiction by a multinational company(MNC).There is a tendency among the MNCs to erode the tax base and shift profits to no-or low-tax jurisdictions and defer the payment of tax on foreign source income by holding funds in CFCs abroad.CFC rules are adopted to prevent MNCs from being involved in such activities.Under these rules,the income of a foreign CFC is deemed to be distributed to its shareholders at the end of each tax year and residents are taxed on the part of their income when it is earned,even though it is yet to be distributed by the CFC.By now,CFC rules have been implemented by about 60 jurisdictions,including three out of eight South Asian Association for Regional Cooperation(SAARC)member countries.Whether the other SAARC countries should adopt CFC rules depends upon the conditions of a particular jurisdiction.They may not be applied in some jurisdictions which do not have serious BEPS activities or deferral of tax payments by residents on their income earned through a foreign CFC.展开更多
文摘A Controlled Foreign Company(CFC)is a company set up to do business in a foreign jurisdiction by a multinational company(MNC).There is a tendency among the MNCs to erode the tax base and shift profits to no-or low-tax jurisdictions and defer the payment of tax on foreign source income by holding funds in CFCs abroad.CFC rules are adopted to prevent MNCs from being involved in such activities.Under these rules,the income of a foreign CFC is deemed to be distributed to its shareholders at the end of each tax year and residents are taxed on the part of their income when it is earned,even though it is yet to be distributed by the CFC.By now,CFC rules have been implemented by about 60 jurisdictions,including three out of eight South Asian Association for Regional Cooperation(SAARC)member countries.Whether the other SAARC countries should adopt CFC rules depends upon the conditions of a particular jurisdiction.They may not be applied in some jurisdictions which do not have serious BEPS activities or deferral of tax payments by residents on their income earned through a foreign CFC.
