Identifying the deal as an attempt to avoid legitimate taxes, politicians in the US have come down heavily on the $160 billion deal between drugs giant Pfizer's and botox-maker Allergan.
According to the conditions of the buyout by Pfizer, it has been proposed that the merged company will maintain Allergan's Irish domicile, allowing Pfizer to escape relatively high US corporate tax rates.
Hillary Clinton, the likely Democratic presidential candidate, accused Pfizer of avoiding its "fair share" of taxes.
The deal would "leave US taxpayers holding the bag", she said.
Claiming that the deal would allow another major US company to hide its profits overseas, senator Bernie Sanders, another Democratic hopeful, said the deal would be a disaster for consumers.
"We cannot continue to allow Pfizer and other corporations to pretend that they are American while reaping the benefits this country has to offer, yet claiming to be another nationality when the tax bill comes," said Democratic representative Rosa DeLauro.
Terming the Pfizer's departure from the US as "disguising", Republican presidential candidate Donald Trump said: "Our politicians should be ashamed."
This would be the largest inversion deal in the US. Inversion is the term that is used to identify the act when a US firm merges with a company in a country with a lower tax rate and moves its headquarters there.
In Ireland, the corporate tax rate is 12.5%, compared with the 35% Pfizer currently pays in the US.
Citing justification for the deal, Pfizer boss Ian Read said the savings from the deal would give it "the strength to research, discover and deliver more medicines and more therapies to more people around the world".
Last year in a similar attempt, Pfizer had unsuccessfully tried to buy off rival AstraZeneca, which analysts said was designed to reduce Pfizer's tax bill.
Though there were no comments from the White House so far, earlier, US president arack Obama has called such inversion deals unpatriotic and has tried to crack down on the practice.
Last week, the US Treasury Department unveiled new rules to clamp down on inversions, but tax experts said the change would not be sufficient to prevent the deal completing.
There are however apprehensions about the completion of the deal as it is still subject to regulatory approval in the US and Europe.
More than $2 billion in cost savings in the first three years would be provided by the merger both the companies claimed. It is expected that the deal would be completed in the second half of 2016 if the regulations were passed.
The companies estimated the merger would increase earnings per share by 10 percent, excluding special items, in 2019 and add by a high-teens percentage rate in 2020.
While it was expected that Pfizer would pay 24 percent in corporate taxes this year, Allergan was supposed to pay just 15 percent. The company now expects a combined tax rate of 17 percent to 18 percent by 2017, said Pfizer Chief Financial Officer Frank D'Amelio.
(Source:www.bbc.com)
According to the conditions of the buyout by Pfizer, it has been proposed that the merged company will maintain Allergan's Irish domicile, allowing Pfizer to escape relatively high US corporate tax rates.
Hillary Clinton, the likely Democratic presidential candidate, accused Pfizer of avoiding its "fair share" of taxes.
The deal would "leave US taxpayers holding the bag", she said.
Claiming that the deal would allow another major US company to hide its profits overseas, senator Bernie Sanders, another Democratic hopeful, said the deal would be a disaster for consumers.
"We cannot continue to allow Pfizer and other corporations to pretend that they are American while reaping the benefits this country has to offer, yet claiming to be another nationality when the tax bill comes," said Democratic representative Rosa DeLauro.
Terming the Pfizer's departure from the US as "disguising", Republican presidential candidate Donald Trump said: "Our politicians should be ashamed."
This would be the largest inversion deal in the US. Inversion is the term that is used to identify the act when a US firm merges with a company in a country with a lower tax rate and moves its headquarters there.
In Ireland, the corporate tax rate is 12.5%, compared with the 35% Pfizer currently pays in the US.
Citing justification for the deal, Pfizer boss Ian Read said the savings from the deal would give it "the strength to research, discover and deliver more medicines and more therapies to more people around the world".
Last year in a similar attempt, Pfizer had unsuccessfully tried to buy off rival AstraZeneca, which analysts said was designed to reduce Pfizer's tax bill.
Though there were no comments from the White House so far, earlier, US president arack Obama has called such inversion deals unpatriotic and has tried to crack down on the practice.
Last week, the US Treasury Department unveiled new rules to clamp down on inversions, but tax experts said the change would not be sufficient to prevent the deal completing.
There are however apprehensions about the completion of the deal as it is still subject to regulatory approval in the US and Europe.
More than $2 billion in cost savings in the first three years would be provided by the merger both the companies claimed. It is expected that the deal would be completed in the second half of 2016 if the regulations were passed.
The companies estimated the merger would increase earnings per share by 10 percent, excluding special items, in 2019 and add by a high-teens percentage rate in 2020.
While it was expected that Pfizer would pay 24 percent in corporate taxes this year, Allergan was supposed to pay just 15 percent. The company now expects a combined tax rate of 17 percent to 18 percent by 2017, said Pfizer Chief Financial Officer Frank D'Amelio.
(Source:www.bbc.com)
