Treasury Secretary Jacob J Lew announced rules on Monday that are aimed at making it more difficult for American companies to lower their tax bills by relocating overseas and that would wipe out the benefits for those that do. It is the administration?s latest move to sidestep a paralysed Congress and tackle a politically charged element of President Obama?s agenda.
?While there?s no substitute for congressional action, my administration will act wherever we can to protect the progress the American people have worked so hard to bring about,? Obama said in a statement after the regulations on the so-called corporate inversions were announced.
The changes will only affect deals that were completed starting Monday. But they could include pending inversion deals, like the one involving AbbVie, an Illinois-based pharmaceutical company that is in the process of acquiring its smaller British rival, Shire, or the Minneapolis medical device maker Medtronic, which is acquiring Covidien in Ireland.
It is calculated to make companies considering such deals ?think twice? before doing so, Lew said. Burger King announced last month it would acquire the Canadian coffee-and-doughnut chain Tim Hortons, focusing new attention on the pace of inversions.
?For some companies considering deals, today?s actions will mean that inversions no longer make economic sense,? Lew said. ?These transactions may be legal, but they?re wrong.?