The US Treasury has cracked down on large corporations shifting their ownership abroad to cut their tax bills, with President Barack Obama applauding the move and calling on the Congress to close wasteful loopholes.
Treasury Secretary Jack Lew briefed Obama yesterday on the first steps Treasury Department is taking to discourage companies from taking advantage of corporate inversions — moving their tax residence overseas on paper to avoid paying their fair share in taxes here at home.
The new regulations from the Treasury Department will make these corporate inversions less lucrative.
Under the new rules, companies undertaking inversions will not be able to make use of those funds, without paying taxes on them, according to the Treasury.
“We have recently seen a few large corporations announce plans to exploit this loophole, undercutting businesses that act responsibly and leaving the middle class to pay the bill,” Obama said in a statement applauding the Treasury’s move.
He said: “And I am glad that Secretary Lew is exploring additional actions to help reverse this trend.”
President Obama has denounced inversions as unpatriotic and has urged Congress to stop them.
Yet he said he was still calling on Congress to pursue tax reform to reduce the corporate tax rate, close loopholes and simplify the tax code.
“That’s why I have called on Congress to lower our corporate tax rate, close wasteful loopholes, and simplify the tax code for everyone,” he said.
Obama said while there is no substitute for Congressional action, his administration will act wherever it can to protect the progress the American people have worked so hard to bring about.
“I believe America does better when hard work pays off, responsibility is rewarded, and everyone plays by the same set of rules.
“In the weeks and months ahead we should do even more to bring fairness to our tax code, help our businesses create more American jobs, and expand opportunity for all,” said the US President.