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HMRC internal manual

International Manual

HM Revenue & Customs
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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.