The U.S. Treasury Department this week will clamp down further on tax-avoiding “inversion” deals done by U.S. companies with foreign rivals, according to a letter obtained by Reuters on Wednesday, November 18, 2015.
With a major inversion deal in the works between U.S. drug maker Pfizer Inc. and smaller Irish competitor Allergan Plc., Treasury said in the letter, “Later this week, we intend to issue additional targeted guidance to deter and reduce further the economic benefits of corporate inversions”, Reuters added.
Inversions can be made real when a U.S. multinational company buy a smaller foreign competitor and relocates to its home country to escape U.S. taxation.
Reuters further stipulated that the details of the letter produced by the U.S. Treasury Department were not spelled out in details. The said letter was signed by the Treasury Secretary, Jack Lew, which is addressed to four senior lawmakers – U.S. Senators Ron Wyden and Orrin Hatch, and Representatives Kevin Brady and Sander Levin who are serving in the tax-writing committees of the Senate and the House.