Wednesday, 14 May 2014

Corporate tax dodging a focus again in Pfizer merger

Britain Pfizer AstraZeneca

A run of multi-national corporate mergers including Pfizer’s takeover of AstraZeneca and a shareholder petition to be presented to the Google annual meeting Wednesday are set to refocus attention on the issue of corporate tax shifting.

Pfizer is facing demands from the British government that it guaranteed jobs and R&D spending in the U.K. if it goes ahead with its $106 billion US takeover bid of the rival pharmaceutical company.
But U.S. legislators are even more worried about the deal, which would see the merged holding company domiciled in Britain, while its headquarters remained in the U.S.

That structure would allow Pfizer to escape the comparatively high 35-per cent U.S. corporate income tax rate for what a company spokeswoman called “a more efficient tax structure that doesn't subject AstraZeneca's non-U.S. profits to U.S. tax.”
In a global atmosphere in which multi-nationals move their profits to low-tax jurisdictions, the merger seems less like an opportunity for synergy and more like a tax-driven deal or inversion, say critics. The U.K. corporate tax rate is about 21 per cent.

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