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Breakingviews: Pfizer’s tax arbitrage bid

Tuesday, April 29, 2014 - 03:18

April 29 - Breakingviews columnists discuss the U.S. drug giant’s hankering for AstraZeneca and whether more so-called inversion deals will follow suit.

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Still a lot to digest on Pfizer's potential. Blockbuster bid for AstraZeneca UK. Rob -- wrote. Very telling me about the inversion concept which is the huge potentially -- tax savings. As a result of basic shifting its domicile to UK. Talk little -- more about it it's it's a big savings as they. If every percentage point decrease in taxes about 200 million dollars. Tries to -- -- 27%. Of its profits and taxes and mr. They -- the UK get a couple things first off the rates a lot -- 20% right. Seven times 200 as one point four Aurilia and on ten times or fifty times you talk about point one billion dollars of -- evaluation of a lot. Yeah -- as quick. And the other thing they're there the goodies to it communicated got a special -- if you have patents that are in the UK. The actual rate you pay and any products derived from the as the only 10% so these could be even lower than that. And also they've got in the UK you're on your contacts and partners all their overseas cash which presumably would be used for him to do this deal. The other thing is that yeah exactly because they come they have to structure the deal didn't both cash and shares. Think it's used -- is catch them if they bring back the US they get taxed on it. These -- for the deal they get the assets and of course the night shift -- to some of the ownership to overseas which helps them with this idea -- -- the -- and yet they have they have to do certain percent twenty to 40% for. An article I want to look at some point this -- as the latest wave right right right time what you get you know we've analytical about tax revenues in the US that. -- -- Increase those or at least on the v.s them and yet you've got companies as effectively trying to get out from under the IRS. And in you've seen this in waves and each time it tighten the rules now the rules tighten up that you can any really do it if you figure this company weigh in any US company by. Merging with a foreign -- because you have to. Get out from various criteria like you -- it and things like that which is why people keep doing it. And -- -- and evil enemies and that's most drug companies Fredricka well as the a couple of it was a slight materials -- Tokyo electron of that she's as far as we can tell. Chiquita did that and Erica pretty much every dollar and a its semiconductor over and -- about it it really in that title once once you read between the lines right about tax about it. So couldn't this. Benefit then be stripped away if you had a change -- of -- Ali it's up they believe the future what what's the once just once -- -- -- doesn't by the president and so the ultimate. This is this only happening because we've had a complete failure to actually. Renovate and renew the tax policy writes that the lack of its national corporation as well as. That is not closing loopholes in it in not -- US characteristics. The thing is that the congress is not going to pass anything this here to assign this role for a shocker exactly say. We've seen a bunch of these deals just something like fifteen or so so far this year Lawson health -- we'll see a lot more because once Pfizer's ballot is that case. If president of -- at the blue chip. American company right other companies will follow are also more congressional failure as a boon for bankers that for taxpayers. We'll be back more breaking news tomorrow.

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Breakingviews: Pfizer’s tax arbitrage bid

Tuesday, April 29, 2014 - 03:18