Yesterday, The Treasury Department made more changes to rules with regard to inversions. The driving force behind the constant meddling into this legal practice is the retention of tax revenue.
“Under the new rules, there will be a three-year limit on foreign companies bulking up on U.S. assets to avoid ownership requirements for a later inversions deal, Treasury said in a statement.”
In an inversion, a U.S. company typically buys a smaller foreign rival and reincorporates to the rival’s home country, which moves the company’s tax domicile, though core management usually stays in the United States.
The Treasury, which had last introduced new rules in November to curb inversions, also is proposing tackling the practice of post-inversion earnings stripping with new limits on related-party debt for U.S. subsidiaries.”
This continued attack on inversions is ridiculous and companies are being targeted unfairly because they represent a possible loss of revenue for the government. Inversions are legal, and sometimes necessary. They are a way for U.S. companies to change their HQ from the U.S. to a foreign country, for the sole purpose of allowing themselves the express privilege of being on par with foreign companies and eliminate the severe disadvantage that the U.S. puts on its own businesses via excessive taxes!
It is outrageous that the government applies such discrimination. It is outrageous that American companies have to chose to move their headquarters elsewhere simply to survive and compete globally, because they are taxed on their profits in two jurisdictions — both domestic and foreign.