Taxation (International and Other Provisions) Act 2010 section 71

Foreign taxation of group as single entity

Section 71 deals with how underlying tax credit claims are determined when a foreign country taxes a group of companies as if they were a single entity, with one company in the group being responsible for paying tax on the combined profits.

• Where a foreign territory taxes a group of resident companies as a single taxable entity, with one "responsible company" paying tax on the aggregate profits of all companies in the group, special rules apply when calculating underlying tax relief on dividends paid to a UK company.
• For the purposes of determining underlying tax on any dividend paid by a company within the foreign group to another company, all the non-resident group companies are treated as if they were a single company, and any actions taken by or in relation to any of them are treated as actions of that single company.
• The relevant profits used in calculating underlying tax are treated as a single aggregate figure for the deemed single company, and the tax paid by the responsible company in the territory is treated as tax paid by that single company.
• A company is "related" to the receiving company if the receiving company controls at least 10% of its voting power, either directly or indirectly, or is a subsidiary (meaning at least 50% voting power is controlled) of a company that holds such control.