Corporation Tax Act 2009 section 30

Restriction on deductions: costs

Section 30 limits the amount of costs that a permanent establishment can deduct when calculating its taxable profits, ensuring deductions do not exceed what an independent enterprise would have incurred.

• Costs claimed as deductions by a permanent establishment are capped at the level an independent enterprise would have incurred
• The restriction applies the separate enterprise principle set out in section 21 of the Act
• This is the first of three sections that restrict deductions when calculating a permanent establishment's attributable profits
• Any costs above the arm's length amount that an independent entity would have paid are disallowed for corporation tax purposes