The government has announced in the Pre-Budget report that it will introduce changes to the taxation of the foreign profits of companies in the Finance Bill 2009, including the introduction of an exemption for foreign dividends, a cap on interest relief calculated by reference to worldwide debt and changes to the controlled foreign company (CFC) rules. The government will continue to consult on reform of other aspects of the CFC rules.
Draft legislation will be published in December 2008 for consultation in order to implement these reforms in Finance Bill 2009.
The announcement is supplemented by two open letters to the Hundred Group and the CBI on the future direction of travel for taxing foreign subsidiaries. The letters invite comment on the proposed reforms and process.
The introduction o...