Feb 282016
A “controlled foreign company” (CFC) is, as the name implies, a foreign company or subsidiary owned by a parent company which is situated in a country different from the parent company’s country of residence. The tax laws of many countries, including the Philippines, do not tax the CFC’s parent company on the CFC’s net income after tax (NIAT) unless the NIAT is distributed as dividends. CFC rules and other anti-deferral rules combat opportunities for profit shifting and long-term deferral of taxation by enabling jurisdictions to tax income earned by foreign subsidiaries where certain conditions are met.