Overview of Controlled Foreign Corporation (CFC) rule –
Controlled foreign company (‘CFC’) rules have become significant policy instrument for governments in their attempt to curb profit shifting by multinational companies and to protect tax bases. CFC rules applies generally to passive income like interest payments and royalties which can easily be placed in affiliates in tax havens without having a substantial physical presence there.
CFC rules stipulate a minimum tax rate that must be levied in a host country, in order to avoid additional taxation in the parent country. Thus, CFC rules reduce the tax gain for multinationals from placing valuable assets in a tax haven.
Certain points in relation to the taxation of CFC income –
First, an ownership threshold is used to determine whether an entity is considered a controlled foreign corporation. Most European countries consider a foreign subsidiary a CFC, if one or more related domestic corporations own at least 50 percent of the subsidiary.
Second, once a foreign subsidiary is considered a CFC, there is a test to determine whether the subsidiary’s income should be taxed domestically. Most European countries determine a subsidiary taxable if the foreign tax jurisdiction levies a tax rate below a certain threshold and/or a certain share of the income is passive.
Third, once a foreign subsidiary is considered a CFC and its income is taxable domestically, a country defines what income earned by the foreign subsidiary is subject to tax.
Sheria za Kampuni za Kigeni zinazodhibitiwa (CFCs) zimekuwa chombo muhimu cha sera kwa serikali katika jaribio lao la kuzuia uhamisho wa faida na makampuni ya kimataifa na kulinda misingi ya kodi. Sheria za CFC zinatumika kwa jumla kwa mapato ya chini kama malipo ya riba na royalties ambayo yanaweza kuwekwa kwa urahisi katika washirika katika makao ya kodi bila kuwa na uwepo mkubwa wa kimwili huko. Sheria za CFC zinaweka kiwango cha chini cha kodi ambayo lazima ipelekwe katika nchi ya mwenyeji, ili kuepuka ushuru wa ziada katika nchi ya mzazi. Kwa hivyo, sheria za CFC hupunguza faida ya kodi kwa mashirika ya kimataifa kutoka kwa kuweka mali zenye thamani katika paradiso ya kodi. Baadhi ya pointi kuhusiana na kodi ya mapato ya CFC <unk> Kwanza, kiwango cha umiliki hutumiwa kuamua kama shirika ni kuchukuliwa kudhibitiwa kampuni ya kigeni. Nchi nyingi za Ulaya huona kampuni ndogo ya kigeni kama CFC ikiwa moja au zaidi ya mashirika ya ndani yanayohusiana na kampuni ndogo ya kigeni inayomilikiwa angalau asilimia 50 ya kampuni ndogo. Kwa upande mwingine, kampuni ndogo ya kigeni inapoamua kuwa CFC, inapaswa kuwa na uwezo wa kuamua ikiwa mapato ya kampuni ndogo ya kigeni yanapaswa kutozwa kodi ndani ya nchi. Nchi nyingi za Ulaya huamua kampuni tanzu inayolipwa kodi ikiwa mamlaka ya kodi ya kigeni inatoza kiwango cha kodi chini ya kizingiti fulani na au sehemu fulani ya mapato ni ya kimakusudi. Kwa upande mwingine, kampuni ndogo ya kigeni inapoamua kuwa CFC na mapato yake yanapaswa kulipwa kodi ya ndani, nchi huamua ni mapato gani yanayopatikana na kampuni ndogo ya kigeni yanapaswa kulipwa kodi.