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HMRC internal manual

International Manual

Controlled Foreign Companies: exemptions - Exempt Activities Test ('EAT'): Repeal of exemptions for superior and non-local holding companies: overview


Schedule 16 was introduced by FA09/S36 as one of a number of measures resulting from the Government’s review of the taxation of foreign profits of companies. Part 1 of the Schedule repealed the ADP exemption in ICTA88/SCH25 (see INTM254610).

Part 2 of the Schedule provides for the amendment of the special rules for holding companies in the exempt activities exemption. It removes the rules providing exemption for ‘superior holding companies’ and ‘non-local holding companies’. The exemption will thereafter only relate to the third category, local holding companies. The main provisions that were repealed were ICTA88/SCH25/PARAS 6(4) to 6(4BB) and 12A. Other amendments remove references to ‘superior holding company’.

The exemption for superior and non-local holding companies remains available during a transitional period ending on 01 July 2011, subject to the special rules in FA09/SCH 16 (seeINTM205280).