Citigroup 'given tax exemption for TARP exit'

16 December 2009

The US government has allowed Citigroup to escape paying billions of dollars in taxation as part of the deal that will see the bank return $20 billion worth of its taxpayer bailout from the Troubled Asset Relief Program (TARP), it has been reported.

Last week, the Internal Revenue Service gave Citigroup an exception to long-standing tax rules in order to help maintain the price of the shares in the company, reports the Washington Post.

As part of last year's $45 billion bailout of the financial institution, the government converted $25 billion of its TARP funds into a 34 per cent share in Citigroup.

The Treasury said it will be selling these shares off to private investors over the course of the next 12 months to end government interest in the firm.

Citigroup is planning to raise the funds to pay back the $20 billion by selling $17 billion worth of common stock and around $3.5 billion in securities.

By Tony Aynsley

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