US banks to keep tax break after fiscal cliff deal

4 January 2013

Banks in the US are set to hold on to an important tax break following the deal to avert the fiscal cliff.

Earlier this week, it emerged that President Obama and John Boehner, speaker of the House of Representatives, had finally come to an agreement on how they could make sure a combination of far-reaching spending cuts and tax hikes would not risk plunging the US back into recession.

Following on from months of tense negotiations between the policymakers, members of the second chamber of Congress voted in favor of a reform that will see the spending reductions delayed and taxes only increased for the nation's wealthiest citizens by 257 votes to 167.

And, according to the Financial Times, American financiers will benefit from the extension of the 'subpart F exception for active financing income' clause, which is expected to protect billions of dollars worth of overseas income.

Under the terms of this arrangement, multinational firms are able to defer paying taxation on business conducted outside of the US.

By Tony Aynsley

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