Corporation Tax Act 2009 section 18HA

Modification of Chapter 3 of Part 9A of TIOPA 2010

Section 18HA modifies the CFC charge gateway rules when they are applied to determine whether a foreign permanent establishment has diverted profits.

• The CFC charge gateway rules (which determine which categories of profits are caught) are borrowed for the purpose of identifying diverted profits of a foreign permanent establishment.
• However, certain provisions are stripped out so that the gateway rules work appropriately in the permanent establishment context rather than the full CFC context.
• The omitted provisions include the solo consolidation rules (Chapter 8), certain parts of the incidental non-trading finance profits rules (including the further 5% rule), and various other specific subsections.
• The effect is a simplified version of the CFC gateway test, tailored to the foreign branch exemption regime rather than the full controlled foreign companies regime.