S.L. 123.187 Art. 8Computation of controlled foreign company income.

For the purposes of regulation 7 -

(a) the income to be included in the tax base of the taxpayer shall be limited to amounts generated through assets and risks which are linked to significant people functions carried out by the controlling company. The attribution of controlled foreign company income shall be calculated in accordance with the arm's length principle;

(b) the income to be included in the tax base shall be calculated in proportion to the taxpayer's participation in the entity as defined in paragraph (a) of regulation 7(1);

(c) the income shall be included in the tax period of the taxpayer in which the tax year of the entity ends;

(d) where the entity distributes profits to the taxpayer, and those distributed profits are included in the taxable income of the taxpayer, the amounts of income previously included in the tax base pursuant to regulation 7 shall be deducted from the tax base when calculating the amount of tax due on the distributed profits, in order to ensure there is no double taxation;

(e) where the taxpayer disposes of its participation in the entity or of the business carried out by the permanent establishment, and any part of the proceeds from the disposal previously has been included in the tax base pursuant to regulation 7, that amount shall be deducted from the tax base when calculating the amount of tax due on those proceeds, in order to ensure there is no double taxation;

(f) there shall be allowed a credit of the tax paid by the entity or permanent establishment against the tax liability of the taxpayer. The credit shall be calculated in accordance with the provisions of articles 77 and 82 of the Act. *