Congressional study: More U.S. companies doing deals to avoid U.S. taxes
WASHINGTON, July 7 (Reuters) - Seventy-six U.S. corporations have shifted their tax domiciles out of the United States to other countries since 1983 to avoid U.S. taxes, with a sharp increase recently in such deals, a policy research arm of Congress said on Monday.
Known as inversions, these transactions are still rare but are becoming more common and causing concern in Washington. Responding to a request from lawmakers for background, the Congressional Research Service said it had found 47 such deals had been done in the past decade and more are in the works.
"Barely a week seems to pass without news that another corporation plans to move its address overseas simply to avoid paying its fair share of U.S. taxes," said Democratic Representative Sander Levin in a statement.
Medical technology group Medtronic Inc said last month that it plans to buy Covidien Plc, a rival based in low-tax Ireland. Analysts said the deal was driven, at least in part, by tax considerations.
The research service said other inversions have been done in the past decade by Mallinckrodt Pharmaceuticals, Perrigo Co Plc, Actavis Plc and other companies, many of them rebasing for tax purposes to Ireland.
In a related matter, international law firm Cadwalader, Wickersham & Taft said in a statement that one of its top partners met on June 27 in Dublin with Irish Prime Minister Enda Kenny and discussed U.S.-to-Ireland inversions.
"The country's tax regime is coming under increasing scrutiny by the EU for the aggressive tax planning strategies undertaken by foreign multinationals," sometimes known as "brass-plating" deals, Cadwalader said in a statement.
Brass-plating refers to inversions in which a U.S. company's relocation means chiefly a new street address and little if any additional jobs or development for the new host country.
"It is important that U.S. and other multinational corporations seeking to re-incorporate in Ireland do so with an eye towards making meaningful connections with the country," Cadwalader said.
Other recent inversions have been structured to set up new tax domiciles in Britain, the Netherlands and Switzerland.
Levin has offered proposals to limit inversions, seen by lawmakers as eroding the U.S. tax base. Other lawmakers and the Obama administration have also offered proposals, but analysts said it was unlikely any would become law this year.
Illinois Democratic Senator Richard Durbin on June 25 told Reuters he hoped drugstore chain Walgreen Co, based in his state, would not do a potential inversion into Swiss-based retailer Alliance Boots Holding Ltd.
Walgreen has said it will do what is in the best interest of the company and its shareholders.
For the Congressional Research Service's list of inversions since 1983, see http://democrats.waysandmeans.house.gov/timeline-20-years-corporate-inve...
Reporting by Kevin Drawbaugh