(Bloomberg) The U.S. Treasury Department softened new rules aimed at preventing multinational companies from shifting their profits offshore to lower-tax countries—a response to sustained criticism from big business and from members of Congress, who had asked that they be delayed and scaled back.

The rules, first proposed in April, aim to restrict lending among subsidiaries of the same corporate parent, which can create income streams in low-tax countries and tax-deductible interest payments in the U.S. But tax lawyers who represent corporate clients complained that the proposed language went too far, banning common cash-management practices that aren’t aimed at tax avoidance.

In issuing final regulatory language Thursday, Treasury officials exempted from the new rules “cash pooling,” a common practice under which companies sweep daily excess cash from various subsidiaries into a single account. They also included limited exemptions for specific cases—including for regulated financial and insurance companies, which are already restricted in their ability to issue debt among subsidiaries—and delayed requirements for companies to document their related-party lending until Jan. 1, 2018.

Even with the softeners, the rules drew concern from Representative Kevin Brady, the chairman of the House Ways and Means Committee, who said President Barack Obama’s administration was moving too quickly to adopt them.

“By rushing the review process—despite the extensive comments received—and finalizing these regulations so quickly, it appears that the Obama administration has ignored the real concerns of people who will be most impacted by these far-reaching rules,” said Brady, a Texas Republican. He said he will study the regulations carefully and seek public comment on them.

Senator Orrin Hatch, the Utah Republican who chairs the Senate Finance Committee, called it “immensely concerning” that the administration released final rules.

“There were a lot of positive steps and responsiveness to industry concerns,” said Michael Shulman, a tax lawyer at Shearman Sterling LLP. “In terms of big picture, there are clearly some big exceptions that will be welcome.” Shulman stressed that he was basing his remarks on a one-page summary of the changes—not the hundreds of pages that will lay out the final rules.

Earnings Stripping
The regulations are in general aimed at a practice that tax officials call “earnings stripping,” by which companies shift their profit to low-tax jurisdictions. The strategy is frequently used by corporations that have moved their tax addresses offshore via so-called inversions. In an inversion, a U.S. company merges with a foreign firm then shifts its tax address overseas. More than 20 companies have undertaken inversions since 2012—and while the maneuver has become an issue in the 2016 presidential race, Congress has taken no action.

Treasury officials say the new rules are intended to apply to intra-company loans that don’t result in net new investments in the U.S. By limiting earnings stripping, the regulations are expected to save as much as $600 million to $700 million a year in tax revenue, a senior Treasury official said.

“This administration has long called for legislative action to fix our broken tax system,” Treasury Secretary Jacob J. Lew said in a news release. “In the absence of Congressional action, it is Treasury’s responsibility to use our authority to protect the tax base from continued erosion.”

The new rule will “make it harder for large foreign multinational companies to avoid paying U.S. taxes, and reduce the incentives for U.S. companies to shift income and operations overseas,” Lew said. “Such tax avoidance practices are wrong and should be stopped.”

The U.S. Chamber of Commerce criticized the Treasury’s approach in an e-mailed statement: “While it appears that Treasury may have attempted to address at least some of the Chamber’s concerns, we continue to believe punitive, one-off changes to the tax law do nothing to address the root of the purported ‘inversion problem’: our antiquated and anticompetitive tax code.”

And the American Council for Capital Formation, a pro-business policy group, called the regulations “deeply concerning.”

“These hastily created regulations will increase the costs of doing business for potentially thousands of American companies and will penalize companies that have no intention of inverting,” the group said in an e-mailed statement. “It’s now up to Congress to pursue a legislative remedy” that will address those issues, the group said.

The rules give Treasury officials and the Internal Revenue Service the authority to treat certain debt transactions among related parties as equity deals—a status that would remove tax benefits associated with loans.

‘Profound Impact’
Almost immediately after they were announced, the rules drew opposition from tax lawyers. As proposed, the rule could have had “a profound impact on a range of modern treasury-management techniques,” according to a research note that the Big Four accounting firm PricewaterhouseCoopers wrote in April.

Lawyers and trade groups sent Treasury officials more than 80 letters commenting on the regulations. The American Bar Association penned a 177-page letter.

In response to the criticisms, Treasury officials created the following exemptions:

• Cash pools and “short-term” loans: Companies use cash pooling to manage cash among their affiliates on a daily basis. It’s not clear how the regulations will define “short-term.”

• Loan transactions among only foreign subsidiaries of U.S. companies: Officials determined that foreign-to-foreign transactions have limited U.S. tax consequences.

• Transactions among subsidiaries organized as S corporations: In that organizational structure, the subsidiaries pass their income to their owners.

• Transactions among regulated financial companies and among regulated insurance companies: These firms are already subject to regulations that restrict their ability to issue intracompany debt or to issue “instruments inappropriately characterized as debt,” according to a Treasury fact sheet about the rules.

• Certain transactions between mutual funds that are regulated investment companies and real estate investment trusts

Andrew Eisenberg, an international tax lawyer at Jones Day, said it was obvious that officials had “gotten rid of a lot of the problematic parts” of the rules. But he added that he was still troubled by the rules’ broad treatment of debt as equity. Interest on debt is deductible, while equity is taxable.

And Shulman, of Shearman Sterling, said he’s eager to see how Treasury will define “short-term” lending. “The devil’s in the details,” he said.