The US Treasury Department has released final regulations on tax inversions. Through tax inversions, US companies move their tax address abroad by merging with a non-US company in a corporate tax friendly jurisdiction and then engaging in internal borrowing to move US profits abroad.
The final regulations are designed to limit the ability of US companies to engage in tax inversions by, among other things, placing limits on intercompany debt associated with inversions. While tax inversions have become less common since the passage of the US Tax and Jobs Act of 2017, which lowered US federal corporate tax rates from 35% to 21%, some corporations continue to be advantaged by tax inversions.
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This article was written with contributions by Timothy Moore.