US action won't reverse tax 'inversion' - Endo boss
Endo, a pharmaceutical company that "inverted" to Ireland last year, says it is confident that US rule changes won't force it back into the American tax regime.
The company's chief executive Rajiv De Silva made the claim on a recent call with analysts.
US President Barack Obama said this week that his administration plans to move quickly to curb what he called a "herd mentality" by companies doing business deals that help them escape US corporate taxes, saying the practice was unfair to Americans.
His comments came on the same day that US retailer Walgreens backed down from its plan to use a so-called inversion to reduce its taxes.
In an inversion, a US corporation avoids US taxes by buying or setting up a foreign company in a country and then moving its tax domicile to that country.
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.
Mr De Silva said recently that the company is confident that its inversion won't be challenged.
"Our belief is that ultimately the thing that would resolve this current conundrum is comprehensive US tax reform," he said.
"We continue to believe that this is a very complex matter and will likely take time to implement.
"We closed that transaction several months ago, so we're very confident in our inversion."
Inversion transactions have occurred at a record pace this year, but three deals have recently collapsed.
Walgreens had been under pressure to use a takeover of Europe's biggest pharmacy chain Boots to move its domicile overseas, but opted not to.
Separately yesterday, car parts supplier Delphi Automotive said it would "vigorously contest" pressure by US tax authorities to file taxes in the United States as a domestic company, when its tax base is in the UK. The Internal Revenue Service told Delphi in June that it would be taxed as a US company due to the sale of its assets to Delphi Holdings after it emerged from bankruptcy in 2009, the company said.
Three prominent Democratic senators this week urged Mr Obama to use his executive authority to reduce or eliminate tax breaks for companies that shift their headquarters overseas to cut their US tax bills. Senator Richard Durbin, the second-ranking Senate Democrat, along with senators Jack Reed and Elizabeth Warren, said immediate action was needed to stop inversions. Senator Carl Levin, who has branded Ireland a tax haven, also said the IRS should stamp out inversion. The senators said companies that have moved their tax domiciles abroad still benefit from US government investments and tax expenditures.