US companies look to flee high US taxes
JULY 20, 2014 LAST UPDATED: SUNDAY, JULY 20, 2014, 1:21 AM
BY TOM MURPHY
THE ASSOCIATED PRESS
THE RECORD
* Some lawmakers fear the deals, called inversions, will seriously reduce tax revenue
A growing number of U.S. companies are looking to trim their tax bills by combining operations with foreign businesses in a trend that may eventually cost the federal government billions of dollars in revenue.
Generic drug maker Mylan Inc. said last week that it will become part of a new company organized in the Netherlands in a $5.3 billion deal to acquire some of Abbott Laboratories’ generic-drug business. The deal is expected to lower Mylan’s tax rate to about 20 percent in the first full year and to the high teens after that.
The Canonsburg, Pa., company’s deal follows a path explored by several other U.S. drug makers in recent months. AbbVie Inc. has entered talks with Shire Plc. over a $53.68 billion deal that would lead to a lower tax rate and a company organized on the British island of Jersey.
But drug makers aren’t the only companies looking overseas for better tax deals.
Last month, U.S. medical device maker Medtronic Inc. said that it had agreed to buy Ireland-based competitor Covidien for $42.9 billion in cash and stock. The combined company would have executive offices in Ireland, which has a 12.5 percent corporate income tax rate. And drugstore chain Walgreen Co. — which bills itself as “America’s premier pharmacy” — also is considering a similar move with Swiss health and beauty retailer Alliance Boots.
These tax-lowering overseas deals, which are called inversions, have raised concerns among some U.S. lawmakers over the potential for lost tax revenue. But business experts say U.S. companies that find the right deal have to consider inversions due to the heavy tax burden they face back home.
– See more at: https://www.northjersey.com/news/business/overseas-acquisitions-help-u-s-companies-cut-taxes-1.1054237#sthash.GaDTjvkx.dpuf
