Section 371NC | Reductions to “the local tax amount” ^F1

(1)This section applies for the purposes of step 2 in section 371NB(1).

(2)The local tax amount is to be reduced to what it would have been—

(a)had any income, or any income and expenditure (where the income exceeds the expenditure), to which subsection (3) applies not been brought into account in determining the CFC's local chargeable profits arising in the accounting period in respect of which tax is paid in the CFC's territory, and

(b)had any expenditure to which subsection (4) applies been brought into account in determining those profits.

(3)This subsection applies to any income, or any income and expenditure, of the CFC—

(a)which is brought into account in determining the CFC's local chargeable profits arising in the accounting period in respect of which tax is paid in the CFC's territory, but

(b)which does not fall to be brought into account in determining the CFC's assumed taxable total profits for the accounting period.

(4)This subsection applies to any expenditure of the CFC—

(a)which is not brought into account in determining the CFC's local chargeable profits arising in the accounting period in respect of which tax is paid in the CFC's territory, but

(b)which does fall to be brought into account in determining the CFC's assumed taxable total profits for the accounting period.

(5)Subsection (6) applies if—

(a)in the CFC's territory any tax falls to be paid in respect of the CFC's local chargeable profits arising in the accounting period,

(b)under the law of that territory, any repayment of tax, or any payment in respect of a credit for tax, is made to any person, and

(c)that repayment or payment is directly or indirectly in respect of the whole or part of the tax mentioned in paragraph (a).

(6)The local tax amount is to be reduced (or further reduced after any reduction under subsection (2)) by the amount of that repayment or payment.