Temporary US Tax Laws Just 'Window Dressing', Complains Neal

by Mike Godfrey, Tax-News.com, Washington

19 November 2002

Speaking to the Bermuda Sun newspaper last week, several observers dismissed the recent temporary US tax measures - which require shareholders in companies which relocated offshore this year to declare and pay tax on profits realized when the company perfomed its corporate inversion- as a mere sop for anti-offshore campaigners, both within and without the political system.

Talking on condition of anonymity, one senior legal advisor observed that: 'It is a nothing bill and a nothing rule', whilst another - also unnamed - legal insider suggested:

'It appears that the Republican dominated Treasury has put forward tame 'temporary' legislation to ease any pressure that may still linger over the corporate inversion issue.' However, he added that: 'It does not address the issues of the Tycos and Global Crossings that really got up everyone's noses. In fact it will do nothing to change the way inversions are carried out.'

Rep Richard Neal, a Democrat and prominent campaigner against offshore relocations by US companies supported the newspaper's conclusions on last Wednesday's legislative changes, if not its views as to why companies may choose to invert in the first place:

'Treasury's new announcement to require more filings by the expatriating companies is just more window-dressing,' he observed, adding that: 'The juice here is tax avoidance, which will continue unfettered.'

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