The US Treasury Department has released draft regulations to disallow tax deductions associated with a financial instrument, transaction or entity that is treated differently under US tax laws and those of another country.
Such 'hybrid mismatches' are used by multinational corporations to exploit the differences between tax laws and either claim tax benefits in multiple countries or achieve 'double non-taxation'.
The regulations, made under the Tax Cuts and Jobs Act 2017, will be retroactively effective from 1 January 2018, if approved in time, but will otherwise take effect from 20 December 2018.
