The Treasury Department issued a second notice Thursday evening designed to limit tax benefits of overseas tax-inversion deals. Tax inversions occur when a company completes an acquisition, moves its tax address out of the United States and therefore potentially reduces tax payments.
The department's notice will further limit the ability of U.S. firms to combine with a foreign entity in order to create a company in a third country. The notice also restricts the ability of American companies to inflate a foreign parent corporation's size and requires the new foreign parent to be a tax resident of the country in which it was incorporated.
The Treasury said these actions apply to deals closed Thursday or after Thursday.