BioCentury
ARTICLE | Politics & Policy

Senators, governors weigh in on inversions, Pfizer/AZ deal

May 10, 2014 1:54 AM UTC

Sens. Carl Levin (D-Mich.) and Ronald Wyden (D-Ore.) said on Thursday they plan to block corporate inversions that allow U.S. companies to lower their tax rates by re-domiciling abroad while maintaining physical headquarters in the U.S. The comments come in the wake of multiple bids from Pfizer Inc. (NYSE:PFE) to acquire AstraZeneca plc (LSE:AZN; NYSE:AZN). Pfizer has made no secret about its desire to use the deal to relocate to the U.K., where the corporate tax rate is 21% compared to the pharma's 2013 effective tax rate of 27%. For Pfizer to recognize the tax benefits, AZ shareholders must own at least 20% of the combined entity (see BioCentury, May 5).

Levin said he intends to introduce legislation to close the loophole. Wyden said he plans legislation retroactive to May 8 which would require acquired foreign companies to own at least 50% of a combined entity for a U.S. company to reincorporate overseas. In response, Sen. Orrin Hatch (R-Utah) suggested simply lowering the corporate tax rate. ...