By CFC regulations, I'm going to assume you are referencing the controlled foreign corporation (CFC) rules that exist in many countries. CFC rules are designed to limit deferral of income taxes by using offshore entities. Generally, when a shareholder owns stock in a corporation, the shareholder does not recognize income until the corporation declares and pays a dividend to the shareholder. In effect, much of the income tax on earnings can be avoided or deferred indefinitely because companies would accumulate earnings in a foreign corporation and never pay dividends. The CFC rules prevent closely held companies from deferring income by never paying dividends. The rules provide that certain types of income must pass through currently to the shareholders and be subject to current income tax, even if no cash dividends are declared and paid during the tax year.