US set to limit benefits of inversion
Lew said “there is one loophole that should be shut down immediately — inversions”.
“With the pace of these deals on the rise and no clear sign of when Congress will have legislation in place, treasury is completing its work on administrative action to use our existing authority to limit the economic benefits of inversion,” he added.
“Administrative action cannot shut the door completely, and Congress will still need to act.”
The Organisation for Economic Co-operation and Development and G20 economies are working on plans for a global exchange of information to stop tax-avoidance strategies used by companies such as Google, Apple, and Yahoo.
Multinationals hold an estimated $2 trillion in low-tax jurisdictions, OECD secretary general Angel Gurria told reporters last week.
In an inversion, US companies reduce taxes by moving their addresses abroad. Businesses including Medtronic and AbbVie have sought foreign addresses through mergers.
Lew also said it’s up to the G20 to decide whether Russian President Vladimir Putin can attend a meeting of global leaders in Brisbane in November.
“The question of who attends the summit is really a matter that’s resolved by the group,” Lew said.
As long as Putin’s government threatens Ukraine’s sovereignty, “there will be unity to isolate Russia economically”, he said.
Talks he held with his counterparts over the weekend “certainly suggest that we remain quite united”.
Finance chiefs and central bankers meeting in Cairns said low interest rates are contributing to a potential build-up of excessive risk in financial markets, even as monetary stimulus is needed to bolster uneven global growth.
Lew said there was an “intensified call” among members to boost domestic demand in Europe and praised what he said was progress the officials made towards “eliminating the risk that any firm is too big to fail by coming to a broad consensus” on total loss-absorption capacity of large global banks.
