Pfizer Buys Botox-Maker Allergan: Analysts Say It's A Strategy To Avoid Paying Billions In US Taxes

By Louise Bonquin | Nov 25, 2015 06:39 AM EST

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On Monday, Pfizer announced through press release that it will merge with another global pharmaceutical company Allergan. It was revealed that the two will sign a $160 billion deal to become the biggest drug manufacturing company in the world.

The merger may look like a good business move, but American lawmakers and financial analysts say otherwise. This is because, the deal means Pfizer will be able to dodge its responsibility to pay huge amounts of taxes to the US government.

Many claim that the premier multinational biopharmaceutical company, currently headquartered in New York, is only trying to get away from paying billions in taxes since the merger will result in the transfer of Pfizer's head office to Ireland. The taxes will dramatically go down because he company won't be on US soil anymore.

Pfizer's Move to Buy Allergan was Met with Criticisms

The Pfizer-Allergan merger has been labeled as the "largest inversion deal ever" by experts and political parties. Moreover, Vermont Sen. Bernie Sanders called the Monday's dealing as a "disaster" and opined that the administration must stop the agreement between the two drug-makers.

On the other hand, Donald Trump, GOP presidential candidate for the forthcoming US election, was aghast at the decision and called Pfizer's decision "disgusting." And, referring to the current tax system that inspires such moves, he said "our politicians should be ashamed."

That system allows businesses to reposition profits abroad or relocate their tax addresses to territories with minimal tax so as to cut back the U.S. tax base through applying the intra-company transaction rule.

Hillary Clinton also said that she was prompted to propose new business-tax regulation to make sure big companies will pay the right tax due to them.

"I urge Congress to act immediately to make sure the biggest corporations pay their fair share," Clinton said.

Lawmakers Want Tax Law Revamped

In the wake of the Pfizer-Allergan merger, Wall Street Journal stated that government leaders call for the tax code to be revised. They are pushing for this in order to protect the economy.

Rep John Delaney who has been ardently promoting the revamp of international tax law said that the merge of Pfizer and Allergan is a wake-up call to pursue tax reform.

In a nutshell, experts stressed that Pfizer sought the business deal as part of its tax inversion strategy -- transferring its head office to Ireland will definitely slash taxes and effectively lift the heavy tax burden off the company.

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