Taxation (International and Other Provisions) Act 2010 section 99

Allocation of expenses etc. in calculations under section 35 of CTA 2009

Section 99 sets out rules for how an insurance company's expenses and other deductions are set against items of foreign income when calculating the foreign tax credit available against UK corporation tax.

• When an insurance company earns foreign income eligible for double taxation relief, the credit for foreign tax is limited by treating that income as reduced by allocated expenses under sections 100 and 101
• If a 75% subsidiary is used under a scheme whose main purpose is to circumvent these expense allocation rules, the subsidiary's income is treated as if the parent insurer's expenses applied to it directly
• Where the expense allocation reduces the foreign tax credit below what it would otherwise be, the company may deduct the shortfall when calculating its trading profits for the relevant category of insurance business
• The portion of foreign income attributed to a particular category of insurance business is determined by reference to the same fraction as the foreign tax attributable to that category