Taxation (International and Other Provisions) Act 2010 section 371LA

Introduction to Chapter – the low profits exemption

Section 371LA introduces the low profits exemption, which allows a controlled foreign company (CFC) with sufficiently low profits to be exempt from the CFC charge.

• Chapter 12 of Part 9A establishes an exemption known as the "low profits exemption" from the CFC charge
• The exemption is designed to relieve CFCs with low levels of profit from the UK tax charge that would otherwise apply
• Whether the exemption applies is determined by reference to either the CFC's accounting profit or its assumed taxable total profits
• The exemption must be considered alongside the general conditions for the CFC charge set out elsewhere in the legislation