Boston, MA 09/24/2014 (wallstreetpr) – During an interview with CNBC, The Blackstone Group L.P. (NYSE:BX)‘s president and COO, Tony James said that the new tax laws to curb inversion deals will not really deter the companies from moving abroad. An inversion deal is a strategy adopted by American companies to shift their home office to a different country like U.K. or Ireland in order to lower the corporate tax rates. In view of dozen of such deals that happened recently hurting the U.S. tax revenues, the Obama administration has launched new tax rules to bar such deals. As per the rules, the U.S. companies will have to pay tax on their overseas cash at U.S. rates and will have to go through a more strict regimen to qualify for an inversion.
James said that the new rules could impact the movement of capital but will not stop companies from pursuing inversion deals as the foreign tax rates are way lower than the U.S. tax rates, which is a strong motivation for companies to hunt for inversion deals. James is of view that though the corporate tax rates in the U.S. are cut down from 30% in the 1950s to 10% now, but the structure is complex and discouraging for big companies to pay the tax. He added that the tax codes should be simplified along with slash down on tax rate in order to boost the companies to remain in the U.S.
Accommodate The Change
According to experts the treasury’s crackdown on inversions could make transactions less profitable for some companies, but over a long run the companies will find their way through the new rules and the impact is not going to last forever. But, the new tax rules could just be the start as President Barack Obama has hinted that more measures could be on the way, though there is little probability of that happening anytime soon. Following the announcement of new tax code shares of the companies eyeing for inversions fell down, where The Blackstone Group L.P. (NYSE:BX) recorded a dip of 1.87% to $31.95.