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Law360: "Record Inversion Deal Shows Pfizer Unfazed By New Rules"

11/24/2015 News Release Image

Law360: "Record Inversion Deal Shows Pfizer Unfazed By New Rules"

. . . The IRS has acknowledged in its notices on inversions that it only has the power to go so far, putting the ball in Congress’ court to take action on preventing U.S. corporations from hunting for deals that allow them to slash their U.S. corporate tax bills.

One way to do so would be to reduce the threshold of U.S. shareholders and incorporate rules surrounding where the bulk of the company is managed and operates, explained Philip Cohen, a professor in the legal studies and taxation department of Pace University’s Lubin School of Business and a retired vice president of tax and tax general counsel to Unilever U.S.

“I think that when a company is inverted and continues to have substantial U.S. owners, 50 percent or more, then I think legislation should be enacted to treat that company as a U.S. company,” he said.

But the rules still fail to address earnings stripping, one of the most broadly used loopholes when it comes to trimming a company’s U.S. corporate tax bill, Cohen noted.

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