Benefits Of A New Legal Address Abroad Essay

766 Words Feb 2nd, 2016 4 Pages
The definition of the word inversion is the action of turn something, and tax is known as the amount charged for the support of the government. A Tax Inversion is an option or tool that allows a company financially to lower its tax liabilities by obtaining a legal foreign address.
One of the highest corporate income tax rate is represented by the United States system. Many companies seek for effective ways to decrease their tax bills without break U.S laws. Obtaining a new legal address abroad, it is a current and favored strategy to lower corporate tax rates. In other words, change a company address to another country with the purpose to lower its tax rates is a ‘Tax Inversion”.
Since in 1982, more than 50 U.S. Companies have been incorporating into low-tax countries, including 20 in the last 5 years. Tax inversion has been taking place more frequently each year. Automotive, Drugs, Industrial Manufacturing and Metals are the most common industries that have applied this strategy with excellent results, because a tax inversion does not work to all companies, but it has positive feedback to take in consideration. In those days, the Internal Revenue Service reports that a company is achieving inversion of 25 percent by changing to a foreign address. If a company is located in the U.S territory is responsible to report and must present income taxes on al profits including those generated out of the country. It is because tax laws are comprehensive. At difference with U.S.…

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