U.S. firms have been merging with foreign companies to avoid paying taxes for years.
But that could come to an end with the government’s new action on tax inversions.
CCTV’s Lourda Sexton reports.
Regulations tighten on international corporate mergersU.S. firms have been merging with foreign companies to avoid paying taxes for years. But that could come to an end with the government's new action on tax inversions. CCTV's Lourda Sexton reports.
Foreign direct investment into Ireland has increased dramatically from $446 billion in 2013 to $597 billion in 2014, largely as a result of inversions.
These inversions allow foreign companies to relocate their tax domiciles to Ireland-executed by acquiring a smaller company based here.
U.S. companies in particular have taken advantage of such deals to minimize their exposure to America’s 35 percent corporate tax rate.
“You have US companies who want to be very competitive on a global stage and they are saying that at home they are paying corporate tax rates in excess of 35 percent. So I think that until there is a balance-perhaps between relatively high US rates, that haven’t reduced since 1986 and much lower rates elsewhere in the world, I think you will continue to see US companies potentially looking to invert to a number of different countries,” Joe Tynan, head of Tax at PricewaterhouseCoopers Ireland said.
Henley Smith on the US tax inversions
For more on the U.S. tax inversions, CCTV America’s Michelle Makori spoke to Henley Smith, a senior vice president, at the Vanderbilt Avenue Asset Management.