Federal regulators are tightening the screws on US companies that avoid taxes with so-called “inversion” deals.
Inversions typically involve a US multinational buying a smaller foreign competitor and relocating to its home country on paper to escape US taxes.
The US Treasury announced the move amid an impending inversion deal between drug maker Pfizer Inc. and smaller Irish competitor Allergan Plc.
The move is the latest effort to curb such transactions and protect the US corporate tax base, Reuters, reports, citing a letter signed by US Treasury Secretary Jack Lew.
“Later this week, we intend to issue additional targeted guidance to deter and reduce further the economic benefits of corporate inversions,” Lew said in the letter.
It was addressed to four senior lawmakers — Senators Ron Wyden and Orrin Hatch and Representatives Kevin Brady and Sander Levin.
All four serve on the tax-writing committees of the Senate and the House.
In September 2014, the Treasury took several regulatory actions to reduce the tax benefits available to companies that invert while also making new deals more difficult.
At the time, Treasury and the Internal Revenue Service said they were weighing further actions.
But for months, Treasury has offered no fresh guidance on the inversion issue, leaving tax experts to speculate about what could come next.
“We have no further comment beyond what’s in the letter, at this time,” a Treasury spokesman said.
Shares in Allergan were down 5 percent in late trading. A spokesman for Allergan declined to comment.
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