Tax Reform for US Inversions
While it does not appear that US President Barack Obama will be taking administrative action in the near future, other commentators are insisting that corporate tax reform is the only viable option to stop US multinationals from undertaking corporate inversions, which are being used by US corporations when merging with an offshore counterpart to move their headquarters abroad and take advantage of the lower corporate tax rates overseas.
During a Press Briefing on September 2, 2014, White House Press Secretary Josh Earnest indicated that he did not “have a timeline to announce [on] possible executive actions on inversions.”
“As you know, the Treasury Department is hard at work in examining what sort of administrative options may be available to the administration for removing the economic incentive for businesses to essentially renounce their American citizenship to try to get out of paying taxes, or at least out of paying their fair share of taxes.”
Merlo told: “We need comprehensive corporate tax reform as there is a concern that tax inversions, left unchecked, will further erode the corporate tax base and make comprehensive reform that much [more] challenging.”
Warning against short-term fixes that might restrict companies’ ability to invert and the reduce the availability of tax breaks but do nothing to tackle the corporate tax issues, he said: “If we make companies even less competitive, there will be more foreign takeovers.”
The solution to corporate inversions, he concluded, “is to rationalize corporate tax rates so that US-based companies, both public and private, do not have incentives to re-domicile or shift profits.
Source: tax-news
