WASHINGTON,(Pakistan Point News - APP - 5th Augst,2016) - Powerful business lobbying bodies on Thursday sued the Obama administration, seeking to strike down recent rules intended to prevent corporate tax avoidance through so-called inversions. In a rule adopted in April, the US Treasury sought to prevent American companies from moving overseas to reduce their tax burdens, often through reverse mergers. The pharmaceutical giant Pfizer that month abandoned plans for a merger with Botox producer Allergan, based in Ireland, as a result.
In a complaint filed in US District Court in Texas, the US Chamber of Commerce and the Texas Association of Business accuse the Obama administration of attempting to re-write US tax laws while bypassing the legislature, which is controlled by Republicans and hostile to the measure. If the rule is allowed to stand, "it is not just mergers that will suffer -- it is the rule of law, and the certainty and stability required for effective commerce," the complaint said.
In a statement, US Chamber President Tom Donahue said the Treasury and Internal Revenue Service had "ignored the clear limits of a statute, and simply rewrote the law unilaterally." The Treasury Department said Thursday it had acted within its powers to address what lawmakers had failed to. "In the absence of congressional action, Treasury proposed regulations to eliminate tax benefits for companies that acquire multiple US firms over a short period of time," the department told AFP.