Junior Finance Minister Simon Harris signalled to the Irish Independent that Ireland had nothing to fear from the move by the US Treasury, which will, in theory, make inversions more difficult to do and less rewarding.
In an inversion, a US corporation, often a pharmaceutical company, avoids US taxes by buying or setting up a foreign company in a country and then moving its tax domicile to that country.
The new rules, effective immediately, will make new inversions more difficult but whether that will be enough to scupper deals that are pending or under consideration is not clear.
The action follows months of political debate in the United States. The shares of some companies involved in or interested in merger deals were dealt strong blows by the clampdown.
Pharmaceutical company AstraZeneca, which has operations in Ireland, slid 3.6pc, while fellow pharma company Shire’s stock dropped 2.5pc.
Abbvie, which is also based in Ireland, slid 1.7pc in midday US trading, while Pfizer, the biggest US pharmaceutical company, dipped about 0.3pc.
More than a half dozen other companies in the United States and Europe saw their shares fall on the Treasury action.
Minister Harris said US companies are in Ireland for a variety of reasons.
“I think a lot of the issues that have been mentioned over the last number of months including inversions and everything else by President Obama, have been attempts to muddy the water. I don’t think it’s a fair reflection,” Mr Harris said.
“This country doesn’t in any way, shape or form seek such companies, we’re only interested in seeking companies that bring real jobs and real benefit to the country.”
“Inversions, brass-plate companies, call them what you will, they don’t bring jobs, they don’t bring tax contributions and they actually cost this country money in terms of European contributions.”
Last month Endo, a pharmaceutical company that ‘inverted’ to Ireland last year, said it was confident that US rule changes won’t force it back into the American tax regime.
Endo inverted to Ireland last year when it bought Dublin-based Canadian drug maker Paladin, and moved its global headquarters here, making the company liable for tax on profits at our 12.5pc rate instead of the 35pc charged by the US.
It was unclear whether the tougher stance adopted by the Obama administration on “inversion” deals, would end any of the handful of deals currently in the works.
Burger King, which is in the process of an inversion deal with Canada’s Tim Horton’s, said yesterday that it would proceed with its deal despite the US Treasury actions, saying the transaction was not about the tax benefits.
Investors had been expecting some action from the Obama administration to clamp down on tax-avoidance inversions but the steps announced were more far-reaching than anticipated, analysts at Deutsche Bank said.
The moves could kill off prospects of Pfizer returning to bid for AstraZeneca at the end of November, when a six-month cooling-off period imposed by British takeover rules comes to an end. (Additional reporting Reuters)
Article Source: http://tinyurl.com/kbwqb42