FROM THE OFFICE OF PUBLIC AFFAIRS

The Treasury Department announced today that it is conducting a study of the issues arising in connection with the reincorporation of U.S.-based multinational corporations in foreign countries, sometimes referred to as "corporate inversion" transactions, and the implications of these transactions for U.S. tax rules.

In recent months, there have been several announcements of transactions involving U.S.-based multinational corporations reincorporating in foreign countries. The documents prepared for shareholders and filed with the Securities and Exchange Commission in connection with these transactions cite substantial reductions in overall taxes as a key reason for the transactions.

The recent transactions are similar to transactions that began occurring in the late 1990s, but have increased in number and size. "We are seeing a marked increase in the frequency of the transaction announcements and an increase in the size of the transactions," said Treasury Assistant Secretary for Tax Policy Mark A. Weinberger. "The inversion transactions are no longer isolated occurrences."

The Treasury Department's study will focus both on the tax treatment of the inversion transaction itself and on the differences in the tax treatment of a company before and after it enters into such a transaction.

The study will examine all factors, tax and non-tax, that may lead to decisions by U.S. companies to consider the transactions. This will include an examination of the U.S. international tax rules more generally and how they affect multi-national companies headquartered in the U.S. and abroad.

"We need to make sure that there are no inadequacies in our current tax rules that facilitate the transactions or that can be taken advantage of as a consequence of the reincorporation," said Weinberger. "We must also understand if there are aspects of our tax system that are driving companies for reasons of competitiveness to consider leaving the United States."

Treasury expects to work with Congress to address any issues identified by the study.

The Treasury Department solicits comments from the public regarding the issues posed by the inversion transactions.