CONCLUSIVE PRESUMPTION OF LAW IN THE CONTROL FOREIGN CORPORATIONS REGIME
International taxation
The proposed bill states well-defined conclusive presumptions of law to determine the passive or active nature of the items of income derived by a Control Foreign Corporation (“CFC”)
The bill proposes that if a CFC derives 80% or more of its income from genuine economic activities in the ordinary course of its business, the total income derived would be characterized as active income. In this event, the controlling persons of the CFC would not be required to report any deemed item of income under the CFC rules.
Contrary, if the CFC derives 80% or more of its income from passive activities, the total income would be deemed as passive income. Thus, controlling persons of the CFC shall report all the deemed item of income derived by the CFC.