By Clifford Hwang

Perhaps it is due to the long hours that tax attorneys have put in at the office these past two weeks since the Treasury Department introduced new tax-inversion rules, but it finally seems that there may be clarification of these rules soon.  These tax-inversion rules, which were introduced on April 4, had threatened to curb some cross-border mergers and did curb the Pfizer-Allergan deal.  The rules will hopefully be clarified as Canada’s Mitel Networks Corp attempts to merge with the U.S.’s Polycom Inc. for $1.96 billion, which is anticipated to present significant tax savings.  Perhaps the Treasury will offer even more guidance if and when someone files suit against the administration to challenge this rule. 

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April 21, 2016

By Derek Hunter

The phrase “tax inversion” probably could not sound drier. But this esoteric tax maneuver is garnering considerable press, and not just in the finance pages, but in the mainstream news as well.

A tax inversion is a transaction in which a U.S.-based multinational enterprise (MNE) re-domiciles abroad by merging with a foreign corporation. The goal is to swap the relatively high U.S. corporate tax rate (39%) with the lower tax rate of the foreign corporation’s jurisdiction, frequently Ireland (12.5%) or the United Kingdom (21%). Besides the billions of dollars saved (or lost, from Treasury’s perspective) in U.S. taxes, nothing else changes about the corporation.

So what’s all the fuss? First, it smacks of unfairness – big corporations, with the help of their well-paid lawyers, avoid taxes while the little guys make up the difference. It is also a great political issue: President Obama can call an inversion “unpatriotic,” while Republicans can use it as an example of why we need to lower tax rates to be more competitive.

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October 17, 2014