The US government will explore all possible routes to prevent corporate inversions if Congress continues to drag their heels, White House press secretary Josh Earnest has said.
The so-called “inversions”, whereby a US-based company buys up a foreign business in order to re-incorporate abroad, are seen as an attractive option by tax-shy firms. Some are thought to have entered into mergers and acquisitions with little strategic potential, solely to create a base in lower tax-paying regions, whilst others have been accused of shifting their headquarters overseas in name alone.
Although legal, they are unsurprisingly unpopular with the US Treasury, which is rumoured to be planning changes to the law that make a company’s US-issued debt count as equity, thus making it harder to achieve the majority foreign ownership needed to make an inversion possible.
The Obama administration says it does not yet have a timeline in place for taking executive action on corporate inversion deals, but Treasury Secretary Jacob Lew is expected to give details of new measures in a speech on Monday.
