london plan change president barack obama say aim ensure american company avoid tax shift headquarter overseas could also force foreign company adopt conservative u.s. tax-planning strategies one measure restrict ability u.s. subsidiaries foreign company deduct interest pay loan parent firm taxable income aim stop redomiciled american firm reduce u.s. tax bill pile inter-group debt u.s. operations effectively shift profit overseas could also affect european company use similar strategies reduce tax bill unite state buy u.s. firm new rule announce treasury department week aim curb so-called inversions u.s. group acquire small overseas company shift domicile lower-tax jurisdiction drugmaker pfizer plan buy rival allergan move ireland one plan inversions prompt obama administration act 160 billion deal fell apart last week result aspects treasury reform new rule regard debt u.s. subsidiary transfer money overseas parent within three years borrow money pay dividend buy share parent u.s. tax authorities could potentially treat loan equity mean interest debt would deductible u.s. income tax purpose experts say european company would still able shift profit via inter-group debt may gradually long period time without doubt significantly change rule game say stephen shay professor law harvard university old days buy lever much go happen way much constraint become unclear add nancy mclernon president organization international investment trade group u.s. subsidiaries foreign company deny non-u.s. group routinely shift profit overseas debt problem u.s. authorities try fix feel like tax grab say say complexity issue uncertainty internal revenue service irs u.s. tax authority would seek use new power would make invest new u.s. project less attractive chill effect foreign direct investment unite state mclernon add treasury say target situations large debts incur fund dividends shortly inversion foreign acquisition rather common way u.s. subsidiaries accumulate inter-group debt subsidiary gradually pay profit parent dividends borrow money parent new investment propose regulations generally apply related-party debt incur fund actual business investment build equip factory treasury factsheet release last week say provide money foreign company take u.s. subsidiary line u.s. company profit transactions escape irs scrutiny shay say company usually publish detail inter-group finance impossible put figure much profit foreign company shelter u.s. tax inter-group loan richard murphy professor practice international political economy city university london estimate irs could lose tens billions dollars tax year way company reduce u.s. tax bill via inter-group lend include drugmaker glaxosmithkline education group pearson utility scottish power telecoms group vodafone say lend u.s. subsidiaries unwind comply tax rule detail lend arrangements come public attention follow data leak legal action tax authorities 2013 reuters examination tax plan europe large software group sap ag show german company shift profit unite state corporate tax rate least 35 percent ireland whose headline rate 12.5 percent high-interest loan accord reuters calculations base 2015 corporate file sap america inc reduce u.s. tax bill around 200 million year borrow 7.4 billion sap ireland us financial service ltd interest rate least percent debt help fund acquisition u.s. software group cut taxable income around 600 million year spokesman sap group decline comment reuters calculations say company follow tax rule fund structure drive business rather tax reason measure previously propose obama organization economic co-operation development oecd advise develop nations tax policy would limit interest deductions extent reflect operate unit share total group interest cost since sap group total net interest expense million euros last year u.s. subsidiary deduction may disallow proposals treasury plan far limit proposals sap file suggest take large amount cash acquire u.s. subsidiaries recapitalized debt debts accumulate sap do acquire expand u.s. company capture new measure even debt proportion parent overall debt burden hard certain inter-group debts usually run period years time extend opportunity irs re-examine arrangement certainly risk roll instrument go recharacterised equity say victor fleischer professor law university san diego say sap loan u.s. plan curb tax 'inversions could hit foreign company