Tax Clawback Agreement

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Definition: Tax Clawback Agreement

Tax Clawback agreement is an agreement in which the company reinvests the tax benefits it got back into the business. These tax benefits are/may be given by the government mostly to help the companies/ventures when they are in trouble.

There have been instances in which the tax benefits were used inappropriately. If caught company is asked to pay the tax benefits at even higher rates.

Tax clawback is useful if genuinely used by the company as it gives additional liquidity to the company to use in case of recession or other financial issues.

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