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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsMerger Would Let Pfizer Duck A Billion Dollars In U.S. Taxes Each Year
A major corporate takeover in the prescription drug industry is motivated in part by a desire to duck billions of dollars in U.S. taxes, the Wall Street Journal reported Monday night. If Pfizer is successful in its bid for AstraZeneca, the combined firm would set up its technical headquarters abroad, slashing its tax liability but still allowing the company to conduct day-to-day operations from its current American headquarters.
Pfizer currently holds tens of billions of dollars in profits offshore to avoid American taxes, a practice so common that total offshored corporate profits hit $2 trillion earlier this year. Acquiring the British firm AstraZeneca and moving the merged companys tax home to Ireland, the Netherlands, or some other tax haven country would still allow me to access the offshore funds and do it in a tax-efficient way, Pfizers top financial executive told the Journal.
Corporate accountants have a name for shifting a companys tax home without modifying its actual operating structure. Known as an inversion, the practice has been around for almost twenty years. Companies used to be able to invert at will in the late 1990s, for example, American heavy manufacturer Caterpillar simply hired an accounting firm to set up a Swiss subsidiary to hide profits from U.S. authorities but as rules have tightened, inversions have become more and more difficult to conduct. Today, inversions are only possible as part of international acquisitions of the sort Pfizer is pursuing.
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http://thinkprogress.org/economy/2014/04/29/3431950/pfizer-tax-avoidance/
msongs
(67,394 posts)BrotherIvan
(9,126 posts)And allow for bulk negotiated rates like other civilized countries. They say the US pays more for drugs to help subsidize those in poorer countries, and yet the company will not even pay taxes on those profits. Nice gig if you can get it. Guess they read all those articles about Apple and had a brilliant idea. Genius, I tell you.