Inversions - special focus

August 09 2014

Between 1983 and 2004 there were 29 inversion transactions out of the US. In the decade following, almost 50 companies restructured using the method. With foreign profits trapped offshore by an outdated, worldwide system which would hit them with a tax on repatriation, as well as a high tax rate, the temptation to consider an inversion is proving too much for US companies, particularly those in the highly-mobile pharmaceuticals sector. Whatever the motivation, inversions are in vogue. ITR’s special report looks at the knock-on impacts of the current wave of inversions, including shareholder pressure to consider an option they see their rivals pursuing and the possible inflammation of the tax morality debate in the US. We also bring you exclusive insight as to why Danaher is not looking to invert.

The past month has seen a growing number of US politicians and legislators crying foul at the practice of inverting. President Obama has described inverters as “fleeing the country to get out of paying taxes”, while Jacob Lew, US Treasury Secretary, has called for a greater sense of “economic patriotism”. Democrats are more adamant about curbing the restructuring technique immediately, while Republicans, for the most part, want to see action under the umbrella of comprehensive tax reform. Sander Levin, his brother Carl, and Ron Wyden, Senate Finance Committee chairman, are among those to have proposed specific anti-inversion legislation, including legislation that would have retrospective effect to May 8 2014. Efforts to reform the US tax code indicate the crawling pace of change on Capitol Hill, but there is no denying there is a narrowing window of opportunity for taxpayers already looking at restructuring, or considering a merger or acquisition, to think about inverting.

Check out our infographic on page 5 to see how pharmaceuticals companies are leading the inversions charge, and review our insights as to which company in the sector could be next to invert.

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inv1.png	Inversions trend continues to cause controversy July 18 2014
inv2.png	Companies under pressure to consider inverting July 4 2014
inv3.png	Why Danaher Corporation is not looking to invert July 18 2014
Download this special report as a PDF