Section 371KI | Category D income

(1)A CFC's category D income for an accounting period consists of the gross amounts (that is, the amounts before deduction of expenses or transfers to or from reserves) of any income which—

(a)is brought into account in determining the CFC's accounting profits for the accounting period, and

(b)is to be included in the CFC's category D income in accordance with subsection (3) or (4).

(2)Subsection (3) applies if—

(a)income arises from any provision made or imposed by means of an arrangement as between the CFC and any company connected with the CFC,

(b)in the CFC's territory, the income is reduced by an amount (“the relevant amount”) for tax purposes on the basis that the income is more than what it would have been had the company connected with the CFC not been connected with the CFC, and

(c)there is not in any territory a corresponding increase for tax purposes in the income of a company connected with the CFC.

(3)The relevant amount is to be included in the CFC's category D income.

(4)Income is to be included in the CFC's category D income so far as the tax which falls to be paid in respect of the income in the CFC's territory is at a reduced rate by virtue of a ruling or other decision or an arrangement made in relation to the CFC by a governmental authority in that territory.