Following the scrapping of the proposed US$160bn merger deal between Pfizer and Ireland’s Allergan this week, the Irish Department of Finance has indicated that the country is not seeking to attract US corporate tax dodgers.
On Tuesday the US Treasury Department released proposed rules that would make so-called corporate tax inversions – in which US companies move their head office to a country with a more attractive corporate tax regime – more difficult. Pfizer called off its planned takeover of Allergan the next day
Ireland’s corporate tax rate is about 12.5% compared to the US rate of 39% and the Pfizer-Allergan deal would have re-located the combined company to Dublin. However, a Department of Finance spokesperson told FOXBusiness.com that it does not encourage “brass-plate operations”, only those that create real economic growth such as job creation.
“In relation to any transactions that may not involve real substance in terms of jobs and investment in the Irish economy, Ireland does not encourage such transactions,” said David Byrne. He added, “We only have and want real substantive foreign direct investment [FDI] – the kind that brings real jobs and investment into Ireland.”
In a statement Byrne said that his Department “examined whether there are any targeted changes that could be made to the Irish tax regime to discourage this activity and that it would be difficult to design a measure that would not infringe European Union [EU] law or have potential unintended consequences for substantive Irish operations.”
President Obama said this week that while the US Treasury Department would make it more difficult and less lucrative for US companies to exploit the “corporate inversions loophole” only Congress could close it for good. “The Irish government has made clear that we would welcome any changes made by the US administration to address this problem,” said Byrne.
A recent Gallup poll found that respondents identified the 'economy in general' as their biggest concern.
However, a London summit on the industry’s introduction of the technology cautions that testing and acceptance are still at an early stage and firms should proceed with caution.
The proposals of both US presidential candidates could shake up operating conditions in several sectors, reports the credit ratings agency.
The Danish shipping and oil conglomerate confirmed that it will separate its businesses into stand-alone transport and energy divisions.