Obama administration introduces new rules to combat corporate tax inversions

(Image credit: Mark Wilson/Getty Images)

last updated 8 January 2015

The Treasury department plans to crack down on American companies that reincorporate overseas as a way to avoid paying taxes.

Treasury Secretary Jacob Lew announced Monday that new rules will help close the "glaring loophole in the U.S. tax code" that allows an American business to acquire a foreign company in order to switch its citizenship and avoid U.S. taxes. One target is "hopscotch" loans, where companies are able to get around paying taxes on dividends by loaning their earnings to the foreign company, USA Today reports. Those will now be taxable in the U.S. A requirement that the company's former owners own less than 80 percent of the new company is also being strengthened.

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Catherine Garcia has worked as a senior writer at The Week since 2014. Her writing and reporting have appeared in Entertainment Weekly, The New York Times, Wirecutter, NBC News and "The Book of Jezebel," among others. She's a graduate of the University of Redlands and the Columbia University Graduate School of Journalism.