U.S. corporations have availed themselves of something called “corporate inversions” in recent years, which is the process by which they change their country of residence (typically through becoming a subsidiary of a foreign parent corporation) in order to face lower tax rates and avoid U.S. tax on foreign source income altogether. As a reaction to this, the IRS has issued regulations and a series of measures to discourage this unearned tax break.

The new regulations will…

• Tighten ownership requirements
• Limit access to earnings by preventing
  • Hopscotch loans
  • Decontrolling
  • Tax-free repatriations

For more information, read our article, “IRS makes move against corporate inversions”.