The Taxation of Controlled Foreign Corporations: An International Comparison

Robert B. Shortly was a chartered accountant in Toronto.

With the financial support of the Canadian Tax Foundation, Arnold undertook a detailed comparative analysis of the taxation of controlled foreign corporations in six countries that have enacted anti-tax-haven legislation: Canada, France, Germany, Japan, the UK, and the U.S. To provide the context for the comparison, there is an extensive discussion of the general tax treatment of foreign-source income. There is also a detailed discussion of the Canadian system with respect to controlled foreign corporations, including suggestions for change based on the comparative analysis.

This is a research study and a good one. However, it is definitely directed to those who are involved or wish to be involved in the foreign tax area. It is not light reading and requires a strong taxation background. As it was researched over the period 1982-84 and finally completed in 1986, the reader must keep in mind that the tax world is always changing and thus any specific applications should be cross-checked. But as a sound base for the taxation of controlled foreign corporations, it is required reading.