It’s Getting Harder For Big Pharma To Dodge Taxes
April 9, 2016
As Washington cracks down on pharmaceutical company greed, the largest ever health-care-acquisition between Allergan and Pfizer has been dissolved.
Pfizer will have to pay Allergan $400 million in fees for pulling out of the planned $160 billion merger, but the mega-pharmaceutical company will end up paying much more in avoided taxes.
Pfizer was targeting the merger with Allergan, which has a legal ‘home’ office in Dublin, Ireland, and was meant as a safe haven to avoid paying millions in taxes to the US government. Pfizer is based in New York, and would need a foreign address in order to get a lower tax rate.
Big Pharma has been fighting with the current administration to avoid paying taxes for some time now. As Forbes reports:
“Jack Lew, Obama’s secretary of the treasury, called Pfizer’s bluff, instituting new rules to make the move as difficult as possible.”
This is likely what made Pfizer call off the merger with Allergan, and why the stock price is suffering. Should the $160 billion-dollar deal have gone through, it would have amounted to the largest merger in history.
Lew is also uncovering a host of shady dealings between at least half a dozen pharmaceutical companies which will now be affected by the ‘un-done’ deal. For example – Allergan, who makes Botox, used to pay taxes with a base in Irvine, California, but then was purchased by a Dublin-based pharma company called Actavis for $66 billion. Then there were a few more exchanges and mergers between a New Jersey-based pharma company, a Swiss-based company, and finally Allergan’s eventual tax-base in Dublin, Ireland.