I presume you mean "controlled foreign corporation" regulations.
Many different countries have their own CFC regulations including Australia, the USA, etc.
These laws essentially create a situation where the company needs to abide by the rules of multiple jurisdictions, and not just the one of incorporation.
These regulations often stipulate that the "offshore" corporation may be taxed under certain situations (for Americans, an example of this would be Subpart F income)
I.e. If an American sets up a company in Great Britain (or China, or Uzbekistan) and owns 100% of the shares, this would be classified by the IRS as a CFC.
For Americans CFC regulations come into play when over 50% interest in a foreign corporation is owned by American taxpayers.
If, however, you have over 10% interest in a foreign corporation, you should get proper tax advise and file form 5471 - Information Return of U.S. Persons With Respect to Certain Foreign Corporations.
Other forms Americans may need to file include TDF 90-22.1 and form 8938.
This above answer is a very broad overview, based on my own research and experience owning CFC's, it is not tax advise, and should not be used to avoid taxes.
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.
