Controlled Foreign Corporations (CFC) Explained | Arora Law P.C.
As the world becomes more connected, multinational companies often set up subsidiaries in other countries to benefit from better business conditions and lower tax rates.
Imagine you own a business in the United States and realize you could pay less in taxes by setting up a company in a tax haven or lower-tax jurisdiction country. This might seem like a smart decision, but problems arise when the IRS steps in and asks you to pay your share of taxes. That is why the Controlled Foreign Corporation (CFC) rules were created.