Corporate Inversions 101

Corporate inversions have been in the news recently with the latest being the failed Pfizer-Allergan deal.

Moreover, inversions have been demonized in the political debates as an un-American tax loophole. But inversions aren't really a tax loophole. Inversions, instead, are the result of differences between United States tax law and the taxing regimes of other countries.

Countries assess tax on foreign earned income differently. There are two general methods used to tax income earned abroad by multinational companies: worldwide and territorial.