Call Us Today 510-794-9290
Menu The Law Office Of Lynnette Ariathurai aprofessional Corporation The Law Office of Lynnette Ariathurai A Professional Corporation

Pfizer moves forward with business merger to avoid taxes

There are many reasons for companies to merge with other companies. Many times, the company being acquired possesses a product the acquiring company needs, which was the case with the business merger between Valeant and Allergan. Other times, a merger could be aimed at reducing competition in the marketplace, such as was the case with Comcast and Time Warner Cable. However, one new reason which is becoming increasingly more common in California and other states is to avoid paying U.S. taxes.

This is the reason many corporations in the United States are looking to merge with foreign companies in order to re-incorporate in a foreign country. By doing this, companies are able to take advantage of the lower tax rates of many foreign nations. Many U.S. companies believe they are at a disadvantage against their foreign competition, which often enjoy more favorable tax treatment.

One recent example of this type of merger is Pfizer’s takeover of AstraZeneca. Pfizer is considered a blue-chip U.S. health care firm which has been in operation for 165 years. The long-time American company is now planning on voluntarily giving up its U.S. citizenship in order to operate under more favorable taxation laws overseas. The merger is estimated to be worth $106 billion.

On the other hand, no matter what the reason is for a business merger in California or even overseas, it is important to go through the proper legal procedures for completing the transaction. This includes obtaining the correct paperwork and documentation and submitting to the proper regulating agencies. Also, one should ensure compliance with any applicable laws when planning the specifics of combining the companies.

Source: USA Today, "Regan: Taxes spur foreign corporate 'marriages'", Trish Regan, May 13, 2014

No Comments

Leave a comment
Comment Information
Back-To-Top