Introduction Details of the Schedule Part 1.Controlled Foreign Companies Chapter 16 - Creditable tax of a CFC
308.New section 371PA defines “creditable tax” for the purposes of step 2 in section 371BC(1). The amount of creditable tax calculated under this section is then apportioned among the relevant persons (in accordance with Chapter 17) for the purposes of step 3 of section 371BC(1).
309.New section 371PA(1) provides that the amount of a CFC’s creditable tax for an accounting period is the total of amounts defined in new subsection (1)(a) to (d). This is the total of the following amounts:
	the amount of any relief from corporation tax attributable to any foreign tax which, applying the corporation tax assumptions (in accordance with Chapter 19), would be given to the CFC by virtue of the double taxation provisions at Part 2 of TIOPA 2010 in respect of any income included or represented in the CFC’s chargeable profits for the accounting period;
	any amount of relevant income tax which, applying the corporation tax assumptions, would be set off against corporation tax on the CFC’s chargeable profits for the accounting period by virtue of section 967 of CTA 2010 (cases in which a company receives a payment bearing income tax);
	any amount of income tax or corporation tax actually charged in respect of any income included or represented in the CFC’s chargeable profits for the accounting period; and
	any amount of a foreign CFC charge paid in respect of any income included or represented in the CFC’s chargeable profits for the accounting period.
310.New subsection (2) defines “foreign tax” as the local tax amount (which is determined by Chapter 14 – the tax exemption – at step 2), and any tax under the law of a relevant foreign territory. “Relevant foreign territory” is defined at new subsection (6) as a territory outside the United Kingdom other than the territory in which the CFC is resident for the accounting period. The local tax amount is broadly the amount of tax paid under the law of the territory in which the CFC is resident in the accounting period.
311.New subsection (3) defines “relevant income tax” as income tax which the CFC bears by deduction on a payment to the extent that the payment is included or represented in the CFC’s chargeable profits.
312.New subsection (4) defines “foreign CFC charge” as a charge under the law of a relevant foreign territory (whatever name it is known by) that is similar to the CFC charge.
313.New subsection (5) restricts amounts added to the total amount of creditable tax by subsections (1)(b) to (d) by saying that these amounts should not include so much of any such amount that has been or falls to be repaid to the CFC or any other person whether on the making of a claim or otherwise.