The U.S. Treasury Department should use immediate stopgap regulations to make offshore transactions known as corporate inversions less lucrative, said the department’s former top international tax lawyer, Bloomberg News reported yesterday. The administration can unilaterally limit inverted companies from taking interest deductions in the U.S. or from accessing their foreign cash without paying U.S. taxes, Stephen Shay said yesterday. “If you take away the incentives, a large portion of these deals would not happen because they are indeed tax-motivated,” said Shay, who left the Obama administration in 2011 and is now a professor at Harvard Law School. Companies including Medtronic Inc. and AbbVie Inc. have pending inversion transactions in which they would purchase a smaller foreign company and then move the combined corporation’s legal address outside the U.S. In most cases, companies barely change their operations and don’t relocate their executives.
