7 April 2016
The Proposed and Temporary Regulations Will Affect Future Tax Planning for All Multinational Businesses
On April 4, the US Treasury and the IRS issued extensive proposed and temporary regulations described as curbing inversions and addressing earnings stripping. Although the regulations have been publicized as targeting inversions, the most noteworthy aspect is the proposed rules referring to the recharacterization of intercompany debt as stock for US tax purposes. These proposed rules (not limited to inverted companies) could have far-reaching effects on US and foreign companies, overturning the long-standing treatment of certain intercompany debt arrangements.