Wednesday, September 24, 2014

Restrictions on Tax Inversions

A few months ago, we had discussed the use of “inversion” deals by U.S. companies to minimize the effect of U.S. taxes. Since then, inversions have been the subject matter of intense debate from a policy perspective. Two potential regulatory responses have been proffered. One is more short-term by which the U.S. government limits the ability of companies to carry out inversion deals by either prohibiting or restricting them. The other is more long-term and requires an overhaul of the U.S. corporate tax structure and system.

Earlier this week, the U.S. Treasury adopted the first response and introduced significant curbs on the ability of U.S. companies to carry out inversions. For an analysis of the impact of this announcement, please see here and here.

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