In a bid to avoid the high tax burden in the United States, pharmaceutical firm Horizon Pharma plc has extended its reach to the overseas market in Ireland after entering into USD 600 million acquisition deal with Vidara Therapeutics International plc.
Financial analysts say the trend of corporate inversion has become one of the most popular strategies for companies to avert or reduce their tax burden.
Under section 7874, the US government had earlier this year introduced a legislation to tighten inversion rules in attempt to prevent the American firms from moving their tax residence overseas trying to avoid the US taxation.
The legislation essentially meant at checking corporate inversions after May 2014 for tax purposes. Additionally, US Treasury Secretary Jack Lew called for imposition of limits on the tax advantages linked with the corporate inversion deals. The US corporate taxes are among the highest in the developed world.
According to the experts, a tax inversion deal is possible only when the shareholders of the acquired firm receive stock that is worth at least one fifth of the combined entity.
But, Horizon turned up lucky to emerge as one of the first companies in the US to have managed to carry out an inversion deal overseas after the advent of the new legislation.
The market watchers said that in the recent years there has been a surge in the number of US healthcare companies opting for corporate inversion as an easy means to avoid high corporate tax rate in America.
Recently, Burger King Worldwide, Inc. had gathered enough attention of the global market after option for inversion deal by acquiring Canada-based Tim Hortons, Inc.. The deal, valued at about USD 11.4 billion, allowed the new body to be publicly listed and headquartered at Canada.
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