The Obama administration, in its latest bid to prevent American companies from minimizing U.S. taxes by rebating abroad, issued final rules on Thursday to combat a key tax-reduction technique known as earnings stripping.
Six months after proposing the regulations, the U.S. Treasury made good on its pledge to move swiftly against corporate tax inversions by rolling out the new final rule, despite opposition from business groups and from Republicans in Congress who demanded a delay only last week.
"For years, this administration consistently has called for comprehensive business tax reform to fix our broken tax system," Treasury Secretary Jack Lew told reporters. "In the absence of congressional action, however, it is Treasury’s responsibility to use our authority to protect the tax base."
Business lobbyists said the rules would likely be challenged in court.
Tax inversions occur when a U.S. company is acquired by a smaller foreign business from a low-tax country and adopts its domicile to reduce the combined firm's overall U.S. tax burden.Read More..
