It has been reported that the head of the US Treasury Jack Lew has called for Congress to crackdown on tax inversions. In a leaked letter Mr Lew called for a new sense of ‘economic patriotism’ and for retroactive legislation to counteract tax inversion deals completed since May 2014.
What broadly is a tax inversion?
Very generally a tax inversion refers to a corporation treated as domestic for US tax purposes (that is a corporation organised under the laws of the US or a state thereof) converting into a foreign corporation for US tax purposes. They are called ‘inversions’ because they are typically accomplished by having the US parent company become a subsidiary of a new foreign publicly-traded company.
What are the main advantages for US companies carrying out inversions and have these reasons changed in recent years?
In general...
