INTM225700 | Controlled Foreign Companies: Entity Exemptions: Chapter 13 - The Low Profit Margin Exemption: contents

The low profit margin exemption is an entity-level exemption aimed at those CFCs that perform substantial (in terms of volume) but relatively low value added functions outside the UK such as:

• back-office functions,

• local marketing and distribution operations,

• toll manufacturing, or

• call or data- processing centres.

Any CFC that satisfies the low profit margin exemption, does not need to be included in a chargeable company’s corporation tax return.