Big Tax Benefits Of “Inversion” Make It A Popular Acquisition Ploy

A type of acquisition known as an inversion has major tax benefits for U.S. companies, and recently there’s been a wave of them, writes New York Times reporter and author David Gelles. If a deal results in more than 20 percent ownership of the newly constituted company going to foreign owners, the foreign venue can be designated as the company headquarters, and the company then pays taxes there instead of to the United States. That works out well for the company, if “there” happens to be a country like Ireland, with low corporate tax rates. The question arises: Will the inversion be construed as a loophole worthy of closing any time soon?