David Jetuah, Accountancy Age, Wednesday 22 September 2010 at 10:17:00

Government is willing to consider the "territory" rather than country ofownership model, says Treasury financial secretary Mark Hoban

Long-running efforts to reform the way overseas subsidiaries of UK companiesare taxed are gaining momentum.

The controlled foreign companies regime has caused major headaches for UKmultinationals including Vodafone and Cadbury but Treasury chiefs have said thegovernment is willing to compromise.

Earlier this week, Mark Hoban, financial secretary to theTreasury, confirmedin a speech government's wish to move the country towards a more territorialsystem of corporate taxation.

Hoban said that the coalition government was determined to reform the CFCregime and the taxation of foreign branch profits, so that it "properly reflectsthe modern, global, business environment."

"The UK needs a more territorial approach to taxation," Hoban said in aspeech at City Week, an event to promote the City of London and the UK financialservices industry. "We want to make CFC rules easier to operate, to enhance theattractiveness of the UK economy."

Further reading:

Controlledforeign companies rules must keep UK commercial

Vodafonesettles marathon case with taxman for 1.25bn

PBR06: Brown delivers Cadbury 'insult' on CFC s