AlterNet reports
This week, Pfizer's $160 billion merger with Dublin-based Allergan was scrapped because of new Treasury Department rules to stop such tax dodges [as] tax inversions, [i.e.] reincorporating in countries like Britain, Ireland, or the Netherlands, often merging with a European entity to duck U.S. taxes.
ZeroHedge continues:
As Pfizer-Allergan Sinks, These Inversion Deals Could Be Next
Over the past several years, one of the primary drivers behind [mergers and acquisitions] activity was tax inversions, which, however, as [the] striking announcement [April 4] by the US Treasury made clear, are now effectively over, and with them goes much of the impetus for companies to merge.
And while the Pfizer-Allergan $160 billion merger may be the most notable casualty of the Treasury's decree, there are various other deals working on corporate inversion deals or who have carried out inversions in the past. They are shown in the list below, courtesy of Bloomberg:
Progressive Waste - Waste Connections
Terex - Konecranes
Johnson Controls - Tyco
Mylan - Meda
IHS - Markit
Another AlterNet page mentions:
5 Examples of Scandalous Tax Inversion Since Before the Panama Papers Emerged
Johnson Controls - Tyco
Medtronic - Covidien
Burger King - Tim Horton's
General Electric has held over $100 billion in profits outside of the U.S. since 2012. If inversion were outlawed, GE would have paid nearly $40 billion in federal income taxes that year
Apple has found a loophole in tax treaties that allows them to have no tax presence around the world and holds nearly $70 billion abroad.
Also at Reuters. U.S. Treasury Dept. Fact Sheet. More on tax inversions.
Previously: Pfizer to Buy Allergan for $160 Billion in Biggest Ever Pharma Deal
Related Stories
Pfizer has agreed to buy Allergan, Plc for $160 billion:
US drugs giant Pfizer has agreed a deal to buy Botox-maker Allergan for $160bn (£106bn), making this the biggest pharmaceuticals deal in history. The merger will create the world's biggest drugmaker, to be called Pfizer.
Allergan shareholders will receive 11.3 shares in the merged company for each of their Allergan shares. Analysts have suggested the deal will allow Pfizer to escape relatively high US corporate tax rates by moving its headquarters to Dublin. Last year, Pfizer made an offer to buy UK drugs group AstraZeneca, which rejected the offer, arguing it undervalued the company.
Aside from Botox, Allergan also makes the Alzheimer's drug Namenda and dry-eye medication Restasis. Pfizer makes that-which-cannot-be-named, nerve pain treatment Lyrica, and pneumonia treatment Prevnar. According to the Wall Street Journal:
Pfizer said it expects to buy back about $5 billion in shares in the first half of next year under an accelerated program.
The merger will create a pharmaceutical behemoth, with top-selling products including Pfizer's Prevnar pneumonia vaccine and Allergan's anti-wrinkle treatment Botox and industry-topping R&D budget. The company's drugs and vaccines would cover a range of diseases, from Alzheimer's to cancer, eye health to rheumatoid arthritis.
The deal brings together two pharmaceutical powerhouses with more than $60 billion in combined sales. Last year, Actavis, which bought Allergan and took its name, had more than $13 billion in sales, while Pfizer had nearly $50 billion in revenue.
[...] Pfizer and Allergan said that after the deal closes, the combined company will decide on splitting into two businesses, one focused on patent-protected products and the other on drugs that have lost their patent protection or are close to losing it. It expects to make that decision by the end of 2018.
Related: Judge Rules Drug Maker Cannot Halt Sales of Alzheimer's Medicine - Drug maker Actavis, Plc tried to replace Namenda with a new, patented form. The company changed its name to Allergan, Plc by June 15, 2015.
(Score: 0) by Anonymous Coward on Thursday April 07 2016, @10:39PM
No, really. Thanks.
(Score: 0) by Anonymous Coward on Thursday April 07 2016, @10:57PM
Drug costs will go through the roof if the manufacturers have to start paying taxes.
(Score: 1, Funny) by Anonymous Coward on Thursday April 07 2016, @11:46PM
Drug prices are through the roof already, because they have to pay employees. Obama should outlaw paying employees so drug companies could provide affordable drugs. Handing out money to people just because they work is socialism.
(Score: 0) by Anonymous Coward on Friday April 08 2016, @12:07AM
All those extra tax dollars mean more money for Grand Emperor Baraq Hussein Soetoro to wage wars on behalf of Saudi Arabia and Israel, against the American and European people.
Any money which does go back to the people wont go to citizens but to Mexicans, whose votes (as well of those of their 59-member extended families) are bought with chump-change.
(Score: 0) by Anonymous Coward on Friday April 08 2016, @05:27PM
Perhaps you haven't heard but Obama is due to be replaced by another clown come this next January. Just don't let any one else know I was the one to spill the beans, mmmkay?
(Score: 0) by Anonymous Coward on Friday April 08 2016, @01:11AM
Your and my first reaction might be, fine, so the administration is doing their jobs, so what?
Fact is, that kind of change only happens when Democrats are in the WH. Republicans are the party of big business, despite all their pious talk about Mom and Pop and Main Street. Obama and the Dems were the ones who put in caps on interchange fees for retail credit cards; that was opposed by Republicans in Congress, the same ones that love Main Street so much.
When you start thinking it might be time for the pendulum to swing in the other direction b/c the Dems have held the WH for 8 years, remember that.
Same with the new rules on financial advisors, which I haven't studied, but the consensus seems to be that they are step or two in the right direction of protecting consumers from the usual WS games. Although I've personally never enlisted a broker or a financial advisor, I've had lots of 401K plans from previous employers bounced around from one financial institution to another, which I find out through the mail. Hopefully there will provisions that keep those retiree account flips from being mostly decided by wining-and-dining at the CIO level.
(Score: 1, Interesting) by Anonymous Coward on Friday April 08 2016, @04:26AM
FYI, you can take control of any 401K from a former employer by rolling it over to an IRA at basically any instution that offers IRAs, they can take care of initiating the transfer from there end, no muss no fuss.
When I quit HP I took my 401K which had been at Fidelity with about 20 different funds to choose from and rolled it over into an IRA at Etrade. It has full brokerage access, I can buy and sell anything in that IRA that I can in my regular taxable account. I just bought exchange traded index funds, but still I have full control and no fees.
The one downside to converting it to an IRA is that you can't take a loan against it, with a 401K you can take up to $50K out as a loan without penalties, if you pay it back. But that is a real last resort thing to do, like you are dying and can't afford treatment.
(Score: 0) by Anonymous Coward on Thursday April 07 2016, @10:53PM
That deal stinks for taxpayers.
(Score: 2) by GungnirSniper on Thursday April 07 2016, @11:00PM
Tax avoidance is legal, such as taking moves to minimize rates or gain favorable tax breaks.
Tax evasion is illegal, and includes things like hiding money, or not reporting assets.
Really, the problem here isn't "greedy" companies, but that we have a convoluted tax code [usnews.com] and we tax profits in other countries even if they have already been taxed [taxfoundation.org]. To the best of my knowledge no other nation does that.
Right now unless you're investing via a mutual fund, you're getting taxed twice: your company directly and on your dividend.
Tips for better submissions to help our site grow. [soylentnews.org]
(Score: 0) by Anonymous Coward on Thursday April 07 2016, @11:08PM
So how do these huge companies end the tax year paying less taxes than most people [usatoday.com]? And why are they all moving to Ireland if no other nation does it?
(Score: 3, Informative) by jelizondo on Thursday April 07 2016, @11:40PM
The U.S. does indeed tax companies and citizens twice.
If you are living abroad, the U.S. gubmint considers that any income you make there is taxable in the U.S., which has made some people renounce their citizenship. [bbc.com]
Of course, large companies have a leg up as they can hire lawyers and accountants, but an average expat (maybe retired), has two choices: pay taxes or stop being U.S. citizens
(Score: 2) by Flyingmoose on Friday April 08 2016, @01:58AM
Look up the Foreign Earned Income Exemption.
(Score: 2) by number11 on Friday April 08 2016, @03:01AM
The U.S. does indeed tax companies and citizens twice.
Bull. The US taxes companies once, and citizens once. Companies are people, sorta like citizens (or any resident humans, AFAIK citizenship doesn't confer special tax liabilities), isn't that what they tell us? They have free speech just like people (and money equals speech, so they can give as much money as they want to support a cause or, indirectly, a politician). They can have religious beliefs, so they don't have to provide employee benefits to which the corporate religion objects. They have bonus special privileges, like living (more or less) forever, and (if they're a corporation) insulating their owners from personal financial responsibility beyond their investment (I'm a sole prop, and if my company gets bit my ass is personally on the line). Their human owners can be secret (lawyers are saying "Panama? We don't need no stinkin' Panama, we got Delaware and Nevada!). So why shouldn't they pay taxes? IMO, with all those special privileges, they should pay higher taxes than humans.
Companies take in money, upon which they should be taxed. They pay out money, upon which the recipients should be taxed. Just because you paid taxes on your income, doesn't mean that the guy you spend it with shouldn't have to pay taxes on it. Make the companies like partnerships, where every owner is liable for any judgement against the company, make the companies like real people, where if they commit a crime the entire corporate structure/property can be jailed (I don't want to see the death penalty, just lock Chase up and freeze their accounts for 30 days), and I'll maybe agree they shouldn't be taxed.
(Score: 0) by Anonymous Coward on Friday April 08 2016, @05:01PM
Not only income, but sales. Buy a car, pay sales tax. Buy a used car that's already been sales-taxed? Taxed again, and again, and again.
But wait, if you're a company, you don't pay sales tax on something that goes into a product that will be sales-taxed when it is finally sold. So it's OK to double-tax us stupid sheeple (because nobody is actually representing We The People).
(Score: 2) by Gravis on Friday April 08 2016, @02:26AM
Tax avoidance is doing everything you can to avoid paying taxes without breaking the law.
Tax evasion is doing everything you can to avoid paying taxes including breaking the law.
Since the new rules make such a merger illegal, they have been blocked from tax evasion.
(Score: 3, Insightful) by TheRaven on Friday April 08 2016, @09:02AM
sudo mod me up
(Score: 4, Insightful) by Gravis on Friday April 08 2016, @02:28AM
the problem here isn't "greedy" companies, but that we have a convoluted tax code
that's hilarious. who do you think spends millions of dollars to get just one more loophole added to the tax code?
(Score: 3, Funny) by Snotnose on Thursday April 07 2016, @11:20PM
First off, I think tax inversion is a scam that should be outlawed (no shit sherlock).
That said, how can we expect companies to compete when the government can willy nilly change the rules at any time? Pfizer/Allergen spent a lot of time and money navigating the existing rules to make their deal. Having Obama come in and pull the rug out from under them at the last minute is IMHO unconscionable.
When the dust settled America realized it was saved by a porn star.
(Score: -1, Interesting) by jmorris on Thursday April 07 2016, @11:43PM
First off, I think tax inversion is a scam that should be outlawed
There is no such thing, that is merely a codeword invented by the Progressives in the propaganda dept of the government (i.e. the legacy media) to have exactly the effect it apparently had on your poor low info mind, it generated outrage.
What they are doing is fleeing the country, moving out, buggering off, voting with their feet, exercising the right of "exit", you can pick your euphemism. America is pretty much the only developed country that wants to tax profits made overseas, subjected to taxes in those jurisdictions and kept there. But by moving the corporate HQ out you can stop that madness and only pay taxes to the USG for profits generated in the U.S, There was a time when corporations were willing to put up with such silliness because our Rule of Law created such security that it was considered worth it. Now we appear far less stable and other countries are well established stable nations promising incentives to relocate.
This used to be a basic freedom in this country. America, love it or leave it. Now, like every other socialist hellhole, Obama is building a wall to keep the victims from fleeing. Meaning that anyone who can still manage to move assets out of the country will now feel an urgency to do so, while they still can and to look into obtaining dual citizenship somewhere else. It always works this way, nobody wants to be the ones trapped when the last plane out lifts the gear.
So don't just stack PMs guys, get those bars and coins the hell outta here!
(Score: 1, Insightful) by Anonymous Coward on Thursday April 07 2016, @11:58PM
Meaning that anyone who can still manage to move assets out of the country will now feel an urgency to do so
Apparently there are a few companies that will help you do that. Apparently Panama is a nice launching point for it.
(Score: 2) by hendrikboom on Friday April 08 2016, @02:40AM
As I understand it, the game of shell companies is to make profits that are made in one country appear to have been made in another country instead. The trick is to make sure that the rules that define where the profit is made reflect reality.
(Score: 0) by Anonymous Coward on Thursday April 07 2016, @11:49PM
They also paid a lot of money to lobbyists to prevent a change of rules through the regular process.
Should they be rewarded for that?
(Score: 0) by Anonymous Coward on Friday April 08 2016, @04:38AM
my heart bleeds.
(Score: 0) by Anonymous Coward on Friday April 08 2016, @02:08PM
I guess it was too hard to overcome the stiff opposition.
(Score: 0) by Anonymous Coward on Friday April 08 2016, @09:09AM
for Pharma Bro [soylentnews.org], and I said nothing.
???
When they came for Irish–American business combinations, there was no one to speak for me.
(Score: 0) by Anonymous Coward on Tuesday April 12 2016, @09:15PM
...profit!
(Score: 1, Insightful) by Anonymous Coward on Friday April 08 2016, @03:34PM
The real problem is that for a number of excellent reasons (including the tax code, but also including intrusive regulations and regulators among other reasons) companies want to leave the US of A.
They want to do business here - up to a point - but they don't want to reside here.
The government's actions here haven't prevented them from leaving (just created a new rule for financial wizards to interpret and avoid) and haven't made them want to stay.
This situation is analogous to the case of big companies like EMC getting bought out by private entities like Dell - not because they don't want to be listed on the stock market, but because they're getting sick of the mad agenda of activist investors. Seriously, if you hate Big Corporate America, you should love activist investors because they're persuading the hell out of companies to stop being publically traded.
If the government really, really, really wanted to fix this, they'd take a chainsaw to the tax code, and tax economic activities inside the borders of the US, as defined where either the purchaser of goods or services (including employment) or the seller is in the USA. Then all the companies that have an address in Delaware but do most of their business in Australia can mostly ignore the US tax code, while the behemoths in India who want to sell outsourcing services to US companies get to pay tax - or account for it in their pricing structure, at least. Either way, the shell game of domiciles ends. And buying or selling IP doesn't help, because the listed sale still counts as listed activity.