What is an inverted domestic corporation?

An inverted domestic corporation is a term used to describe a U.S.-based corporation that re-incorporates in a foreign country with the primary purpose of reducing their overall corporate tax burden. This process is often referred to as a corporate inversion.

By becoming a foreign corporation, the company is able to take advantage of the lower corporate tax rates offered in the new country, potentially saving millions of dollars in taxes. This is achieved by shifting profits from higher-tax jurisdictions to lower-tax jurisdictions.

Inverted domestic corporations have been a topic of controversy and debate, as they are seen by some as exploiting loopholes in the tax system to avoid paying their fair share of taxes. In response to this criticism, governments have implemented regulations and restrictions to discourage or prevent corporate inversions.

Overall, inverted domestic corporations are a complex and controversial topic in the realm of corporate finance and tax planning.