Administration’s Decision to Issue Final Rules Is Premature
WASHINGTON (October 13, 2016) – The American Chemistry Council (ACC) issued the following statement in response to the release of final debt-equity regulations under Section 385 of the Internal Revenue Code. The U.S. Department of the Treasury issued its proposal on April 4, 2016. The White House Office of Management and Budget (OMB) received the rules less than two weeks ago and had up to 90 days to decide whether they should be finalized or returned to Treasury for further consideration.
“We are deeply concerned by OMB’s rushed review of Treasury’s debt-equity regulations. The proposed rules touched many segments of the American economy, and we are disappointed that the Administration moved too quickly to conduct a meaningful review of the rules’ impacts.
“While we have not seen the final rules, we had
expressed significant concerns about Treasury’s proposal, which aimed to address corporate tax inversions, but would instead disrupt ordinary business transactions that create jobs. Companies have long relied on intercompany loans as a way to manage cash flows and fund new projects, yet the proposal treated all such debt as suspect, jeopardizing U.S. investment and growth. We sincerely hope that Treasury’s changes to the final rules will address the many serious shortcomings evident in the proposal.
“The U.S. chemical industry has been a vital source of investment in American manufacturing. Since 2010, our companies have announced 274 projects valued at $170 billion, all linked to plentiful and affordable supplies of energy and feedstock. These
new facilities and expansions could create hundreds of thousands of jobs throughout the U.S. economy by 2023. All of the projects rely on their company’s internal treasury functions to provide timely, reliable and efficient funding.
“In our
comments, we had urged the Administration to withdraw its proposed regulations to avoid undue harm to the U.S. chemical industry and other businesses that contribute so much to our economy. Getting the rules right warranted more thorough consultation with stakeholders and a more robust OMB analysis, especially since Treasury has deemed them ‘economically significant.’”
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