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Treasury issues final debt-equity rules with carveouts

Tammy Whitehouse | October 14, 2016

The U.S. Treasury Department has issued its final rules altering debt-equity treatment of certain intercompany financing transactions meant to curb use of “corporate inversions” to escape income tax.

In April, Treasury issued proposed regulations to modify Section 385 of the U.S. Tax Code to target what it regarded as abusive measures to reduce U.S. income tax through finance transactions with overseas operations in low-tax jurisdictions. Swift and vocal feedback, including Congressional intervention, told Treasury the sweeping proposal would ensnare a number of common corporate treasury transactions, burdening companies with unfair added tax and compliance duties...

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