The Inversion Crackdown Is In Full Swing
Excellent--would like to see a lot more of this.
http://www.manufacturing.net/blogs/2014/09/the-inversion-crackdown-is-in-full-swing?et_cid=4179628&et_rid=54679148&type=cta
It looks like the Obama administration has finally thrown down the gauntlet with companies moving their headquarters overseas. For years, companies have been buying smaller businesses abroad and, in turn, evading good old Uncle Sam and his taxes. This practice is called inversion, and President Obama seems to be at the end of his rope with it, going so far as to call it an unpatriotic practice.
The U.S. Treasury Department has changed the rules governing companies engaging in inversions this week, and though it will not have too drastic of an effect on companies that have already inverted, it will most definitely impact companies in the process of doing so or contemplating it.
"Inversion deals now are clearly going to be very difficult to pull off," said Navid Malik, head of life sciences research at Cenkos Securities.
Typically the benefits of an inversion are lower U.S. and global tax bills, but the government has targeted these practices. For example, one of the Treasury’s newest rules directly attacks the practice of “hopscotch” loans, which allow companies to “avoid divided taxes when tapping tax-deferred foreign profits.”
Through newly instated decontrolling methods, the Treasury will be able to deny inverters access to offshore profits by making foreign subsidiaries no longer U.S. controlled.
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