US drug firms act to keep 'Irish base' tax deals
Published 17/08/2014 | 02:30
US companies that want to lower their tax bills by moving their legal address to Ireland or other countries have increased their lobbying efforts since April as the Obama administration and some lawmakers seek to curb the practice. Ireland has come into the crosshairs of US politicians following a spate of high-profile tax-inversion-led buyouts.
In total, nine companies that have sought cross-border mergers, or are considering doing so or are targets of such deals, have begun lobbying against legislation to stop the practice, federal disclosure reports show.
They include Medtronic Inc., the Minneapolis-based firm trying to acquire Irish-based Covidien. Medtronic hired Breaux-Lott Leadership Group in June for $200,000 to block the proposed legislation from moving forward.
The bipartisan lobbying powerhouse includes former US Senators John Breaux and Trent Lott. One company that hasn't publicly announced an intent to move its address abroad - Kimberly-Clark Corp., the Dallas-based health care device manufacturer - added opposition to such legislation to its lobbying report. Kimberly-Clark is spinning off a healthcare unit.
"There are a lot of reasons why tax reform is stuck in Congress, and one of them is because big companies with vested interests want it to be stuck," said Adam Rappaport, a senior counsel at Citizens for Responsibility and Ethics in Washington, which flagged the Medtronic lobbying activity.
"Hiring an army of well-connected lobbyists is probably a good investment on their part, regardless of whether it is in the country's best interest," he said.
Democrats and Republicans have criticised the practice of companies moving their legal addresses out of the US, known as corporate inversions, though each party has a different approach.
Republicans want to lower the corporate tax rate - now 35pc - as part of a broad revamp of the US tax code.
Democrats want a more targeted approach to make it effectively impossible for US companies to buy smaller foreign businesses and take their addresses for tax purposes.
Legislation to prevent the practice introduced by Carl Levin, a Michigan Democrat, is stalled in the Senate. A companion measure introduced by his brother, Representative Sander Levin, is also languishing. President Barack Obama has directed the US Treasury to find ways in which the administration could block the deals.
Sunday Indo Business