A new report by Americans for Tax Fairness has said that pharmaceutical major Pfizer will be able to save much more than it has quoted by shifting its headquarters from United States to low tax regime in Ireland. The figure has been estimated at $35 billion. Last year, the New York-based pharmaceutical giant announced its plans to merge with Allergan and move its base to Ireland.
Pfizer said that the measure would lower its tax rate to around 17 to 18%, which is around $2 billion over three years. The merger is known as ‘inversion’ in which US companies are bought or merges with foreign firms with an aim to reduce US corporate tax burdens. This deal is the biggest ever and has left lawmakers in the United States furious.
The report makers have urged President Barack Obama’s administration that it should use executive authority to refuse the US corporations tax benefits if they move their tax addresses to other nations. The inversion cases have increased since the Obama administration has announced to take action to limit the benefits of corporate inversions.
The new rules would not affect Pfizer-Allergen deal, as it does not meet the technical definition of an inversion. Pfizer spokeswoman Joan Campion said about the merger is ‘not structured to move jobs out of the United States, where we conduct the majority of our research’. The decision will lead to creation of a global, research and development-focused company.
American for Tax Fairness has noted that Pfizer will have an access to $148 billion in profits it earned overseas. Currently, it cannot bring the amount in the US without paying tax for the same. If it brings the cash to the US then it would have cost the firm $35 billion.
Frank Clemente, executive director of the group said, “We believe the Treasury Department can challenge the theft of taxpayer dollars that Pfizer is counting on under this deal”.