If Pfizer Avoids U.S. Taxes by Buying AstraZeneca, Will Congress Be Forced To Act?
What would happen when the America’s top ranking drug selling company Pfizer and the most famous drug selling store Walgreen strike a deal for evading the taxes? Are these companies shifting their business to other territories?
Pfizer has recently disclosed that it would purchase AstraZeneca for $100 billion- 70% of it in stock and 30% in cash. The company has officially said that it is going transfer its tax domicile from United States to holding company of UK for evading the taxes which is generally called as “Tax Inversion”.
Pfizer Chief Executive Ian Read said that “though we would maintain our headquarters in the New York yet it would be difficult to bring the profits of AstraZeneca to United States”. Inevitably, this has become a common trend among the pharmaceutical companies. Take an example of Valeant Pharmaceuticals and Mallinckrodt. Both of these companies are domiciled in different countries and they are saving billions of dollars through the tax inversion.
The government of United States has already brought significant measures against the tax inversions. The administration of Obama has put some strict measures -in the 2015 budget – to prevent the happenings of tax inversion.
Actually, the current law of the country allows companies to reincorporate in any part of the world. For reincorporation, the companies need to transfer 20% of the shares to overseas owners. To counter it, Obama has suggested in his upcoming budget that those companies which intend to reincorporate need to transfer at least 50% of their shares.
Now, it is time for the Congress to enact some laws for preventing the recurrence of tax inversion. Otherwise, most of the companies of U.S will adopt this trend for evading from the taxes.