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Replies to post #197376 on Biotech Values
11/18/15 7:06 PM
11/19/15 7:05 PM
The Treasury Department on Thursday released new rules to restrain U.S. companies from putting their addresses in foreign countries to reduce their tax bills.
The changes will make it harder for U.S. companies to buy a company in one foreign country and locate the combined entity’s address in a different country. They also would limit companies’ maneuvers before a merger to make a foreign company look bigger and thus escape existing U.S. tax restrictions [a maneuver called “stuffing”].
The new rules could have immediate implications for Pfizer Inc. ’s attempt to merge with Allergan PLC [obviously].
One aspect of the rules, which limit companies’ ability to transfer foreign operations to a new foreign parent company, will apply to future transactions by all companies that completed inversions since Sept. 22, 2014, potentially causing problems for those such as Medtronic PLC and Mylan NV that have already completed their inversions.
…The 2014 Treasury actions caused Medtronic to alter its deal financing and led AbbVie Inc. to abandon its plans to merge with Shire PLC. The government hasn’t yet released the formal rules that were supposed to follow the 2014 announcement and Treasury said on Thursday that the rules would be released in the coming months.
…The Treasury Department said it is still working on future rules and warned it may take aim at a practice known as earnings stripping. That is the way companies based outside the U.S. load up their U.S. subsidiaries with deductions and push profits to low-tax countries.
11/19/15 7:09 PM
PFE/AGN—To the degree Treasury is successful [at deterring tax invesrions], more companies will simply get bought out by foreign-domiciled companies.
11/24/15 1:12 PM
What will stop the biggest inversion deals cold is a regulation steering Medicare and Medicaid’s purchases of drugs and medical devices elsewhere. If you want to sell to government plans, your tax residence has to match where the operating headquarters is, among other tests.
AI
