Taxation (International and Other Provisions) Act 2010 section 101

Second limitation for purposes of section 99(2)

Section 101 imposes a second cap on the amount of foreign income that can be used when calculating foreign tax credit relief for insurance companies, by reference to the taxable profits of the relevant business category.

• After the first limitation has been applied, the reduced relevant income is compared against a proportionate share of the taxable profits of the business category concerned.
• If the reduced relevant income exceeds that proportionate share, it is further reduced (but not below nil) to match that share.
• The proportionate share is calculated as a fraction: the relevant income before any reduction, divided by the total income and gains of that business category qualifying for foreign tax credit relief.
• Profits of the business category are calculated after setting off any losses from previous accounting periods.