For the excluded territories exemption to apply for an accounting period of a CFC, the CFC must meet all of the following conditions:

(1)the CFC is resident in an excluded territory (see below) for the period;

(2)the total of the CFC's category A–D income for the period does not exceed the higher of ten per cent of the CFC's accounting profits (see below) for the period and £50,000 (reduced proportionately where the period is less than 12 months). The four categories of income are considered at ¶769-760;

(3)the IP condition (see ¶769-780) is met; and

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