Controlled foreign companies rules must keep UK commercial

Leading tax advisers are hoping talks with the government on how overseas arms of multinationals are taxed will end up keeping the UK an attractive place to do business.

The coalition has started an informal consultation on how controlled foreign companies should be taxed but has stressed that the UK's tax base will be protected at the same time.

Anneli Collins head of tax policy at KPMG said:

"The government is making all the right noises where business is concerned so it’s crucial that UK plc remains engaged in the dialogue and fully participates in the debate over the next few weeks.

"What is really key is that the announcement further indicates that the current government’s approach is to really try to be commercial and make the UK more business friendly."

Under the timetable proposed, interim improvements to the CFC regime will be introduced in Spring 2011 to make the existing rules easier to operate, making the UK more competitive.

Full CFC reform is planned for Spring 2012.

Chris Sanger, head of tax policy at Ernst & Young, welcomed the government settling on a course of action instead of bringing out new proposals to further cloud the issue.

"Finally, the controlled foreign companies consultation represents more of an update and timetable for the rest of the fiscal year, rather than any new proposals."

Further reading:

IoD issues controlled foreign companies call