IRS eases tax rule for its multinationals

The Internal Revenue Service has issued a rule making it easer for US corporations to bring home money generated by their offshore subsidiaries, in an effort to make more cash available during the credit crunch.

The IRS has temporarily widened a 1988 ruling, enabling corporations to borrow money held by foreign subsidiaries without having to pay the 35% corporate income tax, according to Associated Press.

The current rule permits a company's foreign units to make a tax-free loan to the parent company provided it is repaid in 30 days. Over a one-year period, the company can have outstanding loans from its subsidiaries for up to 60 days.

The temporary rule change enables US multinationals to keep cash from a single loan for up to 60 days and borrow money for up to 180 days in a one-year period.