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US firms in Irish move despite Congress

Tuesday, June 03 13:01:54

Four US multinationals plan to take over Irish firms in a so-called "tax inversion" scheme in the near future, ignoring moves in the US Congress to put a stop to the exodus of some of that country's biggest corporate to Ireland and elsewhere.

They are Horizon Pharma and Vidara Therapeutics, Questor Pharmaceuticals and Malinkrodt Pharmaceuticals and Forrest Laboratories and Actavi and finally Chiquita Brands and Fyffes.

US lawmakers are not happy, but there's no signs that this political unease will have any effect on the completion of the proposed deals.

Congress Finance Committee Chair Ron Wyden has threatened that any such inversion transaction taking place on or after May 8 would be the target of future legislation. By this explicit pronouncement of an effective date, Wyden's intention was "in effect freezing the linebackers" - that is, hoping to stop prospective deals with the threat of future retroactive legislation.

Barely two weeks ago, US Republican representative, Sander M. Levin, in the House of Representatives and Carl Levin in the Senate (they're brothers) introduced anti-inversion legislation using the May 8 effective date suggested by Wyden.

These bills, similar to a proposal made by President Obama in his budget, would tighten the rules Congress enacted in 2004 to stop of a wave of inversions that reached its peak in 2002, according to Martin Sullivan, a blogger with US magazine, Forbes, over the weekend.

However, Mr Wyden failed to endorse the Levin brothers' law proposals.

"There are two responses to inversions. The first, as embodied in the Levin bills, is to impose tax penalties on firms that invert. The second is to adopt broad-based corporate tax reform that reduces tax disadvantages for firms that retain their legal residence in the United States," said Mr Sullivan.

This isn't the first time US lawmakers attempted to block tax inversions. Back in 2002, there were two attempts to impose deadlines by which US firms could no longer locate abroad for tax purposes but these were both blocked by later laws in both US houses.