The U.S. Treasury Department and Internal Revenue Service on Monday announced new steps to curb tax-avoiding "inversion" deals that U.S. companies do with foreign corporations, including earnings stripping.
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The latest steps impose a 3-year limit on foreign companies bulking up on U.S. assets to avoid ownership requirements for a later inversions deal, the Treasury said in a statement.
The Treasury also proposes tackling post-inversion earnings stripping with new limits on related-party debt for U.S. subsidiaries. Earnings stripping covers a range of financial dealings that shrink the taxable U.S. profits of multinationals, including those that have moved their tax domiciles abroad in "inversion" deals and others.
Treasury Secretary Jack Lew said the actions would "further rein in" inversions, but added that only legislation in Congress could prevent such deals.
Last November, the Treasury clamped down on inversions by limiting a U.S. acquirer's ability to set up a new foreign parent in a third country and to "stuff" assets into a foreign parent to meet post-inversion ownership limits.