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Washington, D.C. – The U.S. Public Interest Research Group today submitted comments to a ruling issued by The Department of Treasury on corporate inversions. The guidance, released in September, laid out a number of reforms to curb inversions including regulations on “hopscotch” loans and “de-controlling” strategies.
The ruling has helped de-incentivize companies from inverting to avoid paying their U.S. taxes on their U.S. profit. AbbVie cited the Treasury guidance as a primary reason for pulling out of its inversion deal with Shire Inc.
U.S. PIRG submitted a comment urging The Treasury Department to expand on its ruling in a subsequent guidance with ways to block earnings stripping, a strategy that creates the tax benefit for corporations to invert in the first place.
Other recommendations include ending deferral so that American corporations must pay the U.S. taxes they owe on profits that have been booked offshore for tax purposes, and preventing the federal government from awarding contracts to American corporations that have changed the address of their headquarters to a foreign country for tax purposes.
The Treasury Department issued the ruling at a time when high-profile inversions were being considered, including deals involving Pfizer, Walgreens, and Burger King.
“Companies that “invert” don’t move abroad in any real sense. They only hold up their foreign papers when it comes time to pay the tax man, all the while continuing to benefit from America’s infrastructure, education system, security and large consumer market,” said Jaimie Woo, Tax and Budget Advocate for U.S. PIRG. “Average taxpayers, small businesses, and larger domestic companies end up footing the tax bill of inverted companies, which adds up to an estimated $17 billion over the next decade.”
“While any ruling by The Treasury Department is a strong first step towards curbing inversions that allow corporations to avoid their tax bill, it’s up to Congress to close the loopholes once and for all,” added Woo.
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