'Pfizer tie-up 'opportunity' for Ireland says IDA boss
Published 16/12/2015 | 02:30
The $160bn (€146.5bn) merger of US pharmaceutical giant Pfizer with Dublin-based Allergan is an "opportunity" for Ireland, according to IDA chief executive Martin Shanahan.
Last month Pfizer, the world's largest pharmaceutical company, announced plans to merge with Botox manufacturer Allergan in a deal that will create the world's biggest drug maker in terms of revenue.
As part of the deal Pfizer will move its corporate headquarters to Ireland in what is known as a tax inversion, where an American company agrees a merger with a smaller foreign firm and switches its tax residence to the country where the foreign company pays its taxes.
Ireland has a corporate tax rate of 12.5pc compared to 35pc in the US.
Pfizer estimates its effective tax rate, which was 25.5pc in 2014, will fall to about 17-18pc in 2017.
The move has caused controversy in the US, with figures from both sides of the political spectrum condemning it.
However, addressing the Oireachtas Committee on Jobs, Enterprise and Innovation yesterday, Mr Shanahan said that there is a "disproportionate focus on tax nationally and internationally in relation to Ireland."
On the Pfizer-Allergan deal, he said: "Companies make decisions for commercial reasons. Both companies have had a long engagement with Ireland, Pfizer since the late '60s and Allergan since the late '70s, and we have worked with both individually.
"When the merger happens we will work with them jointly and we will look at it as an opportunity to increase the substance of [their] operations further as they transfer their headquarters here."