WASHINGTON – The White House administration is cracking down on American companies that seek to reincorporate overseas or in Canada to avoid paying U.S. taxes.
In a so-called “tax inversion,” a U.S. business merges with or is acquired by a foreign company in a country with a lower tax rate.
Analysts suggest it could be Burger King’s high-profile takeover of Oakville, Ont.-based Tim Hortons that spurred the crackdown.
MORE: Could U.S. move to block Burger King from gobbling up Tim Hortons?
The Treasury Department says it’s putting forward regulations that will make inversions less lucrative by barring some techniques companies use to defer their taxes.
It’s also making it harder for companies to pursue an inversion by tightening the requirement that the company’s former owners own less than 80 per cent of the new company.
Treasury Secretary Jacob Lew says the steps will ensure that it’s no longer financially beneficial for companies to use that tactic.
The new measures will take effect immediately.
MORE: Complete coverage of Tim Hortons and pending Burger King takeover
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