CFC Rules

CFC (Controlled Foreign Corporation) rules are tax regulations that prevent companies or individuals from avoiding taxes by setting up subsidiaries in low-tax countries. If a person or a company controls a foreign company—typically owning more than 50%—the rules require them to report and pay taxes on a proportion of that foreign company's profits, even if those profits are not distributed. This ensures that income earned abroad is taxed fairly in the home country, promoting transparency and preventing tax evasion through offshore entities.