US moves to dissuade firms from moving abroad to lower taxes

WASHINGTON – The U.S. Treasury Department has issued rules to limit the allure of “tax inversions” — where companies trim their tax bills by moving abroad.

The rules would limit companies’ ability to make internal loans that saddle their U.S. subsidiaries with debt and shift profits to countries with lower tax rates — a process called “earnings stripping.” Treasury softened the rules it proposed in April to avoid disrupting normal business operations.

Republicans quickly criticized the rules. Sen. Orrin Hatch, R-Utah, warned they could jeopardize American businesses and the U.S. economy.