IBM's tax manoeuvre helps it save about $1.6 billion

Using a corporate tax loophole that has since been closed, International Business Machines Corp. saved about $1.6 billion last month, The Wall Street Journal reported in its online edition yesterday.

IBM said it had structured a $12.5 billion stock repurchase to take advantage of funds it earned overseas without making them subject to US corporate tax rates. IBM saved about $1.6 billion in the move, the WSJ said, citing a person familiar with the transaction.

According to the report, Neither IBM nor the Internal Revenue Service (IRS) was immediately available to comment.

On 31 May, or two days after IBM''s transaction, the IRS announced plans to issue regulations making companies pay US taxes when they buy back their stock, Its new regulations would treat funds used for buybacks as repatriated earnings.