Beckett G. Cantley, Corporate Inversions: Will the REPO Act Keep Corporations from Moving to Bermuda?, 3 Hous. Bus. & Tax. L.J. 1 (2003).
Summary. This article discussed the attempted legislative solution to the issue of “corporate inversions.” A company undertakes a corporate inversion by forming a company in an offshore tax haven and then having the US based company become a subsidiary of the offshore company. The result is that the offshore tax haven does not tax the offshore company on its profits and the US based company is not taxed on its offshore profits. In addition, the US based company may also undertake an “earnings stripping” program to have significant US income redirected to the non-taxable offshore company. The article discussed draft legislation called the “Reversing the Expatriation of Profits Offshore Act” (“REPO Act”), which would have amended the IRC in several significant ways to prevent companies from undertaking corporate inversions. The article analyzed the draft REPO Act from an operational and policy perspective and concludes that the draft REPO Act will likely prevent corporate inversions.