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

Apportionments to be made in proportion to shareholding

Section 371QD sets out how a controlled foreign company's chargeable profits and creditable tax are apportioned to relevant persons under the first basic rule, using a formulaic approach based on ordinary shareholdings.

• Where certain conditions are met, the CFC's chargeable profits and creditable tax are apportioned to each relevant person in proportion to their percentage holding of the CFC's issued ordinary shares.
• The percentage used for apportionment ("P%") is determined by the relevant person's relevant interest in the CFC's issued ordinary shares.
• Where indirect interests exist through a chain of companies, the shareholding percentages through each link in the chain are multiplied together, and if there is more than one chain leading to the same CFC, the interests through each chain are added together.
• If the conditions for this formulaic approach are not met, a just and reasonable basis of apportionment is applied instead under the second basic rule.