Shapiro quoted on the U.S. Treasury’s tax inversion regulations
David Shapiro, partner and co-chair of Saul Ewing’s Tax and Employee Benefits Practice, shares his thoughts on the U.S. Treasury’s latest attempts to stop tax inversion deals in which one company purchases another based in a different country with a less complex tax regime. The Treasury has developed a new set of rules and has invoked Section 385 of the tax code to bolster its authority over these corporate mergers. In regards to the Treasury’s reform, David said the government is “relying on very broad anti-abuse authority under the regulations – which it does have. This is purported to be to avoid possible abuse of the public offering rule, but in the view of many people, that rule has already been stretched to breaking point.”
Additionally, David commented on the potential effects of the Treasury’s rules on already planned inversions. “It’s much more likely that if they are not paying attention, or are unaware of the rules, they will stumble into a really bad tax situation,” said David. “Rules that are easy to stumble into should not exist without a truly compelling reason. My worry is that, with the frequency of cross-border transactions today, this is going to become a much larger issue.”
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