By Kevin Drawbaugh and Jason Lange
WASHINGTON Mon Sep 22, 2014 7:03pm EDT
WASHINGTON (Reuters) - Moving against tax-avoidance by corporations, the Obama administration is taking several actions to curb deals known as "inversions" that allow companies to escape U.S. taxes by reincorporating abroad.
The Treasury Department on Monday announced new rules, effective immediately, that will reduce tax benefits accessible to companies that have inverted and make new inversions more difficult and less potentially rewarding.
Democratic President Barack Obama, who has sharply criticized inverting companies, said Treasury's steps will discourage such deals, seen by some as a threat to the U.S. corporate income tax base.
"We've recently seen a few large corporations announce plans to exploit this loophole, undercutting businesses that act responsibly and leaving the middle class to pay the bill, and I'm glad that (Treasury) Secretary Lew is exploring additional actions to help reverse this trend," Obama said in a statement.
Inversions have surged in the past year, pursued by big companies such as Burger King Worldwide Inc and Medtronic Inc. The deals usually involve a U.S. corporation buying a smaller, foreign rival and redomiciling in its home country, where taxes are lower.
Treasury Secretary Jack Lew said in a statement: “These first, targeted steps make substantial progress in constraining the creative techniques used to avoid U.S. taxes, both in terms of meaningfully reducing the economic benefits of inversions after the fact, and when possible, stopping them altogether.”
Some companies had feared that new rules would be retroactive, but they were not.
Steps being taken include preventing inverted companies from gaining easier access to foreign profits using "hopscotch" loans; blocking inverted companies' tax-free access to foreign units' earnings; and tightening limits on ownership by the former U.S. owners of an inverted company, the Treasury said.
(Reporting by Kevin Drawbaugh, Jason Lange and Emily Stephenson; Editing by Diane Craft and Steve Orlofsky)
View the original article here
WASHINGTON Mon Sep 22, 2014 7:03pm EDT
WASHINGTON (Reuters) - Moving against tax-avoidance by corporations, the Obama administration is taking several actions to curb deals known as "inversions" that allow companies to escape U.S. taxes by reincorporating abroad.
The Treasury Department on Monday announced new rules, effective immediately, that will reduce tax benefits accessible to companies that have inverted and make new inversions more difficult and less potentially rewarding.
Democratic President Barack Obama, who has sharply criticized inverting companies, said Treasury's steps will discourage such deals, seen by some as a threat to the U.S. corporate income tax base.
"We've recently seen a few large corporations announce plans to exploit this loophole, undercutting businesses that act responsibly and leaving the middle class to pay the bill, and I'm glad that (Treasury) Secretary Lew is exploring additional actions to help reverse this trend," Obama said in a statement.
Inversions have surged in the past year, pursued by big companies such as Burger King Worldwide Inc and Medtronic Inc. The deals usually involve a U.S. corporation buying a smaller, foreign rival and redomiciling in its home country, where taxes are lower.
Treasury Secretary Jack Lew said in a statement: “These first, targeted steps make substantial progress in constraining the creative techniques used to avoid U.S. taxes, both in terms of meaningfully reducing the economic benefits of inversions after the fact, and when possible, stopping them altogether.”
Some companies had feared that new rules would be retroactive, but they were not.
Steps being taken include preventing inverted companies from gaining easier access to foreign profits using "hopscotch" loans; blocking inverted companies' tax-free access to foreign units' earnings; and tightening limits on ownership by the former U.S. owners of an inverted company, the Treasury said.
(Reporting by Kevin Drawbaugh, Jason Lange and Emily Stephenson; Editing by Diane Craft and Steve Orlofsky)
View the original article here
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