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Part 3: transitional provision |
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Approvals given for purposes of section 461 or 461C of ICTA |
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1 | Anything which, as a result of section 461(11) or 461A(4) of ICTA, is treated |
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as having been done by HMRC Commissioners on a particular date under a |
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provision of ICTA repealed by this Act is to continue to be treated as having |
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been done by them on that date under the provision of this Part |
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corresponding to that repealed provision, despite the fact that neither |
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section 461(11) nor section 461A(4) of ICTA is rewritten in this Act. |
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General transitional provision in relation to provisions re-enacted in Part 3 of this Act |
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2 (1) | This paragraph applies where any provision of this Part of this Act re-enacts |
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(with or without modification) an enactment repealed by this Part of this |
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(2) | The repeal and re-enactment does not affect the continuity of the law. |
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(3) | Any subordinate legislation or other thing which— |
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(a) | has been made or done, or has effect as if made or done, under or for |
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the purposes of the repealed provision, and |
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(b) | is in force or effective in relation to accounting periods of friendly |
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societies ending on 31 December 2012, |
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| has effect in relation to subsequent accounting periods of friendly societies |
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as if made or done under or for the purposes of the corresponding provision |
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of this Part of this Act. |
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(4) | Any reference (express or implied) in any enactment, instrument or |
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document to a provision of this Part of this Act is to be read as including, in |
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relation to times, circumstances or purposes in relation to which the |
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corresponding repealed provision had effect, a reference to that |
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| This sub-paragraph applies only so far as the context permits. |
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(5) | Any reference (express or implied) in any enactment, instrument or |
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document to a repealed provision is to be read, in relation to times, |
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circumstances or purposes in relation to which the corresponding provision |
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of this Part of this Act has effect, as a reference or (as the context may require) |
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as including a reference to that corresponding provision. |
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| This sub-paragraph applies only so far as the context permits. |
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(6) | This paragraph is subject to any specific transitional, transitory or saving |
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provision made by or under this Schedule. |
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(7) | The generality of this paragraph is not to be affected by specific transitional, |
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transitory or saving provision made by or under this Schedule. |
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(8) | This paragraph has effect instead of section 17(2) of the Interpretation Act |
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Controlled foreign companies and foreign permanent establishments |
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Controlled foreign companies |
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1 | After Part 9 of TIOPA 2010 insert— |
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Controlled foreign companies |
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(1) | A charge (“the CFC charge”) is charged under this Part on UK |
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resident companies which have certain interests in CFCs. |
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(2) | The CFC charge is charged by reference to the chargeable profits of |
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(3) | A “CFC” is a non-UK resident company which is controlled by a UK |
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resident person or persons (but see subsection (6)). |
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(4) | Chapter 2 sets out the basic details of the CFC charge, including— |
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(a) | the CFC charge gateway (through which profits of a CFC |
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must pass in order to be chargeable profits), and |
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(b) | the steps to be taken for charging the CFC charge. |
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(5) | Chapter 2 is supplemented by Chapters 3 to 17; in particular— |
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(a) | Chapter 3 sets out how to determine which (if any) of |
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Chapters 4 to 8 apply in relation to the profits of a CFC, |
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(b) | so far as applicable, Chapters 4 to 8 set out how to determine |
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which profits (if any) of a CFC pass through the CFC charge |
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(i) | Chapter 4 dealing with profits attributable to UK |
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(ii) | Chapter 5 dealing with non-trading finance profits, |
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(iii) | Chapter 6 dealing with trading finance profits, |
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(iv) | Chapter 7 dealing with profits derived from captive |
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(v) | Chapter 8 dealing with cases involving solo |
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(c) | Chapter 9 sets out exemptions for profits from qualifying |
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(d) | Chapters 10 to 14 set out full exemptions from the CFC |
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(e) | Chapter 15 sets out how to determine the persons whose |
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interests in a CFC are relevant to the charging of the CFC |
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(f) | Chapter 16 sets out how to determine the creditable tax of |
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CFCs (for which credit is given against chargeable profits), |
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(g) | Chapter 17 sets out how to apportion a CFC’s chargeable |
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profits and creditable tax among the persons who have |
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relevant interests in the CFC. |
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(6) | Chapter 18 explains the concept of “control” and also sets out certain |
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cases in which a non-UK resident company is to be taken to be a CFC |
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even though it is not controlled by a UK resident person or persons. |
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(7) | Chapter 19 explains the concepts of “assumed taxable total profits”, |
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“assumed total profits” and “the corporation tax assumptions” which |
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are referred to in this Part. |
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(8) | Chapter 20 contains rules for determining the territory in which a |
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CFC is resident for the purposes of this Part. |
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(9) | Chapter 21 contains provision about the management of the CFC |
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charge, including the collection of sums charged. |
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(10) | Chapter 22 contains supplementary provision, including definitions |
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of terms used in this Part. |
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(11) | Nothing in this Part affects— |
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(a) | the liability to corporation tax of a non-UK resident company |
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in accordance with section 5(2) and (3) of CTA 2009 (non-UK |
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resident companies within the charge to corporation tax), or |
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(b) | the determination of such a company’s chargeable profits for |
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corporation tax purposes in accordance with Chapter 4 of |
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(12) | This Part is part of the Corporation Tax Acts. |
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371BA | Introduction to the CFC charge |
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(1) | The CFC charge is charged in relation to accounting periods of CFCs |
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in accordance with section 371BC. |
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(2) | Section 371BC applies in relation to a CFC’s accounting period if |
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(a) | the CFC has chargeable profits for the accounting period, and |
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(b) | none of the exemptions set out in Chapters 10 to 14 applies for |
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(3) | A CFC’s chargeable profits for an accounting period are its assumed |
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taxable total profits for the accounting period determined on the |
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(a) | that the CFC’s assumed total profits for the accounting |
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period are limited to only so much of those profits as pass |
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through the CFC charge gateway, and |
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(b) | that amounts are to be relieved against the assumed total |
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profits at step 2 in section 4(2) of CTA 2010 only so far as it is |
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just and reasonable for them to be so relieved having regard |
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(4) | “The CFC charge gateway” is explained in section 371BB. |
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(5) | Subsection (3) is subject to section 371SB(7) and (8) (which relates to |
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settlement income included in a CFC’s chargeable profits). |
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371BB | The CFC charge gateway |
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(1) | Take the following steps to determine the extent to which a CFC’s |
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assumed total profits for an accounting period pass through the CFC |
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| In accordance with Chapter 3, determine which (if any) of Chapters |
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4 to 8 apply for the accounting period. |
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| If none of those Chapters applies, none of the CFC’s assumed total |
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profits pass through the CFC charge gateway and step 2 is not to be |
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| Determine the extent to which the CFC’s assumed total profits fall |
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within any of the Chapters which applies for the accounting period. |
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| The CFC’s assumed total profits pass through the CFC charge |
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gateway so far as they fall within any of those Chapters. |
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(2) | Subsection (1) is subject to— |
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(a) | Chapter 9 (exemptions for profits from qualifying loan |
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(b) | section 371JE (which provides for adjustments of profits |
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which would otherwise pass through the CFC charge |
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gateway linked to the exemption set out in Chapter 10). |
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371BC | Charging the CFC charge |
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(1) | Take the following steps if, as provided for by section 371BA(2), this |
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section applies in relation to a CFC’s accounting period. |
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| In accordance with Chapter 15, determine the persons (“the relevant |
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persons”) who have relevant interests in the CFC at any time during |
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| If none of the relevant persons is a company which meets the UK |
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residence condition (see subsection (2)), the CFC charge is not |
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charged in relation to the accounting period and no further steps are |
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| In accordance with Chapter 16, determine the CFC’s creditable tax |
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for the accounting period. |
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| In accordance with Chapter 17, apportion the CFC’s chargeable |
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profits and creditable tax among the relevant persons. |
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| Take each relevant person which is a company meeting the UK |
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residence condition and, in accordance with section 371BD, |
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determine if the company is a chargeable company. |
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| If there are no chargeable companies, the CFC charge is not charged |
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in relation to the accounting period and step 5 is not to be taken. |
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| The CFC charge is charged on each chargeable company as follows. |
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(a) | corporation tax at the appropriate rate on P% of the CFC’s |
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(b) | Q% of the CFC’s creditable tax, |
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| is charged on the chargeable company as if it were an amount of |
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corporation tax charged on the company for the relevant corporation |
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| This step is subject to section 371BH. |
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(2) | A company meets the UK residence condition if it is UK resident at a |
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time during the accounting period when it has a relevant interest in |
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(3) | For the purpose of taking step 5 in subsection (1) in relation to a |
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chargeable company (“CC”)— |
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“the appropriate rate”, subject to section 371BH, means— |
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(a) | the rate of corporation tax applicable to CC’s profits |
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of the relevant corporation tax accounting period on |
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which corporation tax is chargeable (see section 4(1) |
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(b) | if there is more than one such rate, the average rate |
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over the whole of the relevant corporation tax |
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“P%” means the percentage of the CFC’s chargeable profits |
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“Q%” means the percentage of the CFC’s creditable tax |
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“the relevant corporation tax accounting period” means CC’s |
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accounting period for corporation tax purposes during which |
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the CFC’s accounting period ends. |
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371BD | Chargeable companies |
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(1) | A company (“C”) which meets the UK residence condition is a |
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chargeable company for the purposes of step 4 in section 371BC(1) if |
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the total of the following percentages is at least 25%— |
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(a) | the percentage of the CFC’s chargeable profits apportioned |
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to C at step 3 in section 371BC(1), and |
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(b) | the percentages (if any) of those profits which are |
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apportioned at that step to relevant persons who, at any time |
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during the accounting period, are connected or associated |
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(2) | Subsection (1) is subject to sections 371BE to 371BG. |
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