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World experience in economic development over recent periods indicates that, despite periodically occurring crisis situations, including globalization processes appearing all over specific countries, Such situations consistently develop on a more accelerated scale. Undoubtedly, the crisis situation that developed in the world market in the first half of 2020 under the influence of COVID-19 on all economies of countries without exception has had a great influence, and the nature of such an influence will certainly be felt over the next several years. In this vein, the establishment of the rules applicable in a particular jurisdiction regarding the activities of controlled foreign companies is one of the mechanisms for any state to protect its own national tax base. Using this approach, the modern rules of tax regulation of controlled foreign companies provide for the establishment of special rules for the shareholders, acting as controlling persons in terms of profits obtained from their foreign companies. At the same time, the application of tax exemptions to the profits of controlled foreign companies is undoubtedly one of the riskiest operations, despite the fact that a wide list of grounds for their application may be provided for within the specific state. As a result of a study of the activities of controlled foreign companies operating within the framework of national jurisdiction, when analyzing the degree of influence of tax bases, a strongly pronounced linear relationship with a correlation coefficient of -0.93 was revealed. This circumstance made it possible to identify the following important feature for controlled foreign companies: financial corporations are no longer attracted by the option of being in a specific national jurisdiction; moreover, they are more focused on other jurisdictions, including low-tax or offshore ones. The correlation analysis revealed a strongly pronounced linear relationship between the tax base and the tax rates; however, in terms of controlled foreign companies, which are primarily subject to national legislation, the correlation coefficient amounted to +0.89, which characterizes the economic tendency to reduce their financial investments, despite the reduction of the actual tax rate. In turn, for controlled foreign companies, whose activities are regulated to a greater extent by foreign legislation, the correlation coefficient amounted to -0.93, which is characterized by a reflection of the greater economic effect of actual tax rate reduction according to the following scenario: the tax rate reduction represents more financial injections for a particular national jurisdiction. At the same time, against the background of the quite consistent and successful in specific areas unification of EU tax rules, the problem of the incoherence of the rules concerning controlled foreign companies versus national jurisdictions of both EU member states and other countries remains open and relevant. This circumstance contains controversial issues regarding the legitimacy of the application of the general regime of controlled foreign companies, since taking into account the fundamental economic freedoms, which, in particular, are enshrined in the OECD Model Double Taxation Convention on Income and Capital, the legitimacy of establishment of the internal rules of controlled foreign companies for various kinds of challenges, including Brexit, are sufficiently controversial.

Controlled foreign companies: influence on the sovereignty of the national tax base