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New 1% Excise Tax on Stock Buybacks May Have Far-Reaching Consequences for Capital Markets, SPAC and M&A Transactions
White & Case – On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, a reconciliation bill that revives parts of the tax legislation from the ill-fated Build Back Better Act as part of a larger package also addressing climate change, energy and health care. In particular, the Act establishes a new one-percent excise tax on certain stock buybacks by domestic public companies. This excise tax has a broad reach that could unexpectedly affect a range of capital markets, SPAC and M&A transactions beyond plain vanilla stock buybacks.