Name: Treasury on inversion
Uploaded: 2014-09-23
Duration: 1 min 38 s
Description: Treasury on inversion

After pressure from the Obama Administration and others the US Treasury Department is finally taking steps to address corporate tax inversion. It's called inversion. Big time company's not the hard ware store down the street choose to reincorporate in foreign countries that reap major tax [ MUSIC ] To combat the new practice, the Treasury Department has laid out new rules in the tax code, meant to make tax inversion less appealing for companies. The Treasury Department wants to stop hopscotch loans. Companies have to pay US taxes when foreign money comes back to the United States, but hopscotch loans allow that foreign money to be sent as a loan to the new foreign parent company created by the tax. Conversion, thus, avoiding U. S. taxes. Also, when an American and a foreign company merge, the foreign company must own at least 20 % of the newly formed company. The Treasury has now cut down on some of the tricks U. S. companies use to shrink its. Sized dividend payouts or blow up the foreign company size, passive assets, right before the merger. And according to Treasury Secretary Jacob Lew this is just the beginning. Treasury will continue to review a broad range. Range of authorities for further anti- inversion measures as part of our continued work to close loopholes. The United States has one of the highest corporate tax rates in the world at 35 %, while Ireland for example, sits at 12 %. And while the new rules won't effect any deals that have already. Be closed. The colossal merger between American medical tech company Medtronic and Ireland based company Covidien, will be affected by the new regulations.