New crackdown on corporate tax avoidance
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The U.S. government is taking more steps to clamp down on companies that try to reduce their tax bills by merging with foreign firms.
On Monday, the Treasury announced new regulations intended to further discourage so-called inversions, which have been on the rise in recent years.
After a U.S. company inverts, it may change the address of its headquarters to a foreign country but still operate in the United States.
“Many of these companies continue to take advantage of the benefits of being based in the United States — including our rule of law, skilled workforce, infrastructure, and research and development capabilities — all while shifting a greater tax burden to other businesses and American families,” said Treasury Secretary Jack Lew.
The new set of rules aim to do a few things:
-Prevent so-called “earnings stripping.”
-Stop companies from flouting existing curbs on inversions.
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