WASHINGTON (Reuters) - The Obama administration, in its latest bid to prevent American companies from minimizing U.S. taxes by rebasing abroad, issued final rules on Thursday to combat a key tax-reduction technique known as earnings stripping.

United States Secretary of the Treasury Jack Lew speaks at the Centre for American Progress in Washington, U.S., October 13, 2016. REUTERS/Gary Cameron

Six months after proposing the regulations, the U.S. Treasury made good on its pledge to move swiftly against corporate tax inversions by rolling out the new final rule, despite opposition from business groups and from Republicans in Congress who demanded a delay only last week.

“For years, this administration consistently has called for comprehensive business tax reform to fix our broken tax system,” Treasury Secretary Jack Lew told reporters. “In the absence of congressional action, however, it is Treasury’s responsibility to use our authority to protect the tax base.”

Business lobbyists said the rules would likely be challenged in court.

Tax inversions occur when a U.S. company is acquired by a smaller foreign business from a low-tax country and adopts its domicile to reduce the combined firm’s overall U.S. tax burden.

Inversions have occurred since the 1980s, but a new wave in recent years prompted the Treasury to take a series of actions including Thursday’s final regulations, which were unveiled in April as part of a package that led to the collapse of a $160 billion merger deal between U.S. drugmaker Pfizer Inc (PFE.N) and Ireland’s Allergan Plc (AGN.N).

Treasury also imposed a temporary rule in April to prevent foreign companies from engaging in serial inversions. That is expected to be finalized later this year.

Earnings stripping occurs when the U.S. subsidiary of a newly inverted company avoids taxes on domestic operations by sending them overseas as tax-deductable interest payments.

The newly finalized regulations would reclassify some forms of debt as equity, changing tax-exempt interest payments into dividends that are taxed.

Business groups including the U.S. Chamber of Commerce have warned that the regulations could harm the cash management operations of U.S.-based multinationals and pose damaging unintended consequences for a range of businesses by creating mountains of red tape.

But Treasury officials said the final rules addressed those concerns by granting exemptions for regulated financial and insurance firms, cash pooling, short-term debt, transactions between the foreign units of U.S. companies, stock acquisitions for employee compensation plans and other operations.

The regulation also relaxed requirements for companies to document intercompany loans and delayed the documentation deadline for a year to Jan. 1, 2018. </s> The US government has issued new regulations aimed at clamping down on so-called tax inversions, a practice whereby multinationals shift their tax base to lower tax jurisdictions in order to reduce their bills.

The EU has been in the crosshairs of US politicians for years, as multinationals have sought to avoid the US corporate tax rate of 35 per cent. The Republic has long been a destination of choice for big corporations because of its 12.5 per cent rate.

On Thursday, the US Department of Treasury and the Internal Revenue Service issued “final regulations” that will further reduce the benefits of corporate tax inversions and “level the playing field between US and non-US businesses”.

The move will likely have serious repercussions for the Republic’s ability to attract big business from the United States.

The US government said the move would limit the ability of companies to lower their tax bills through transactions involving debt that do not support new investment in the US. The rules will also reduce the incentive for companies to engage in inversions.

The regulations also require large corporations claiming interest deductions to document loans to and from their affiliates, just as businesses of all sizes do when they borrow from unrelated lenders.

“We have taken a series of actions to make it harder for large foreign multinational companies to avoid paying US taxes and reduce the incentives for US companies to shift income and operations overseas,” said Treasury Secretary Jacob J. Lew. “Such tax avoidance practices are wrong and should be stopped,” he added.

Specifically, the regulations will narrowly target problematic “earnings stripping” transactions that generate deductions for interest payments on related-party debt that does not finance new investment in the US.

The US government said the rules would seek to minimise “unintended consequences” for regular business activities. </s> WASHINGTON, March 28 (Reuters) - U.S. President Donald Trump signed an executive order on Tuesday to undo a slew of Obama-era climate change regulations that his administration says is hobbling oil drillers and coal miners, a move environmental groups have vowed to take to court.

The decree's main target is former President Barack Obama's Clean Power Plan that required states to slash carbon emissions from power plants - a critical element in helping the United States meet its commitments to a global climate change accord reached by nearly 200 countries in Paris in 2015.

The so-called "Energy Independence" order also reverses a ban on coal leasing on federal lands, undoes rules to curb methane emissions from oil and gas production, and reduces the weight of climate change and carbon emissions in policy and infrastructure permitting decisions.

"I am taking historic steps to lift restrictions on American energy, to reverse government intrusion, and to cancel job-killing regulations," Trump said at the Environmental Protection Agency headquarters, speaking on a stage lined with coal miners.

The wide-ranging order is the boldest yet in Trump´s broader push to cut environmental regulation to revive the drilling and mining industries, a promise he made repeatedly during the presidential campaign. But energy analysts and executives have questioned whether the moves will have a big effect on their industries, and environmentalists have called them reckless.

"I cannot tell you how many jobs the executive order is going to create but I can tell you that it provides confidence in this administration´s commitment to the coal industry," Kentucky Coal Association president Tyler White told Reuters.

Trump signed the order with EPA Administrator Scott Pruitt, Interior Secretary Ryan Zinke, Energy Secretary Rick Perry and Vice President Mike Pence by his side.

U.S. presidents have aimed to reduce U.S. dependence on foreign oil since the Arab oil embargo of the 1970s, which triggered soaring prices. But the United States still imports about 7.9 million barrels of crude oil a day, almost enough meet total oil demand in Japan and India combined.

While Trump's administration has said reducing environmental regulation will create jobs, some green groups have countered that rules supporting clean energy have done the same.

The number of jobs in the U.S. wind power industry rose 32 percent last year while solar power jobs rose by 25 percent, according to a Department of Energy study.

Environmental groups hurled scorn on Trump's order, arguing it is dangerous and goes against the broader global trend toward cleaner energy technologies.

"These actions are an assault on American values and they endanger the health, safety and prosperity of every American," said billionaire environmental activist Tom Steyer, the head of activist group NextGen Climate.

Green group Earthjustice was one of many organizations that said it will fight the order both in and out of court. "This order ignores the law and scientific reality," said its president, Trip Van Noppen.

An overwhelming majority of scientists believe that human use of oil and coal for energy is a main driver of climate change, causing a damaging rise in sea levels, droughts, and more frequent violent storms.

But Trump and several members of his administration have doubts about climate change, and Trump promised during his campaign to pull the United States out of the Paris climate accord, arguing it would hurt U.S. business.

Since being elected Trump has been mum on the Paris deal and the executive order does not address it.

Christiana Figueres, former executive secretary of the United Nations Framework Convention on Climate Change who helped broker the Paris accord, lamented Trump's order.

"Trying to make fossil fuels remain competitive in the face of a booming clean renewable power sector, with the clean air and plentiful jobs it continues to generate, is going against the flow of economics," she said.

The order will direct the EPA to start a formal "review" process to undo the Clean Power Plan, which was introduced by Obama in 2014 but was never implemented in part because of legal challenges brought by Republican-controlled states.

The Clean Power Plan required states to collectively cut carbon emissions from power plants by 32 percent below 2005 levels by 2030.

Some 85 percent of U.S. states are on track to meet the targets despite the fact the rule has not been implemented, according to Bill Becker, director of the National Association of Clean Air Agencies, a group of state and local air pollution control agencies.

Trump´s order also lifts the Interior Department's Bureau of Land Management's temporary ban on coal leasing on federal property put in place by Obama in 2016 as part of a review to study the program's impact on climate change and ensure royalty revenues were fair to taxpayers.

It also asks federal agencies to discount the cost of carbon in policy decisions and the weight of climate change considerations in infrastructure permitting, and reverses rules limiting methane leakage from oil and gas facilities. (Additional reporting by Timothy Gardner; writing by Richard Valdmanis; Editing by Mary Milliken and Jeffrey Benkoe)
The Obama administration's Treasury Department, in a move against corporate tax inversions, enacts regulations to combat a key tax-reduction technique known as earnings stripping.