NU Online News Service, June 21, 11:15 a.m. — Washington
The Senate Finance Committee has approved a bill aimed at preventing a much-publicized method used by some U.S. corporations to avoid U.S. taxes.
The bill, S. 2119, seeks to stop U.S. corporations from moving their corporate charters to low-tax jurisdictions outside the United States, through a process known as “corporate inversion.”
The bill, which is co-sponsored by Finance Committee Chairman Max Baucus, D-Mont., and Ranking Republican Chuck Grassley, R-Iowa, was passed by a voice vote.
The legislation applies only to companies that seek to renounce their U.S. citizenship. The legislation does not apply to companies that originated in so-called tax havens, such as Bermuda.
Under S. 2119, two types of inversions are addressed.
A pure inversion is defined as one in which a U.S. company becomes the subsidiary of a foreign corporation or transfers substantially all of its properties to a foreign corporation.