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Insmed Incorporated Message Board

  • justarook04 justarook04 May 1, 2014 7:23 AM Flag

    Tax Inversion

    This was discussed after the Insmed presentation at Needham in early April (interesting):

    "Tax inversions allow U.S. companies, which face one of the highest tax rates in the world - a federal tax rate of 35 percent, and an overall rate that can be close to 40 percent including state and local taxes - to move to a lower-tax country by buying or creating a new holding company.

    Since 2008, about two dozen U.S. companies have used the strategy, versus about the same number over the previous 25 years, according to a Reuters review of transactions.

    Ireland, the Netherlands, Switzerland, Canada and Britain lately have been the most common destinations of U.S. companies seeking new tax domiciles. The U.K. tax rate for companies is due to drop to 20 percent from 21 percent next year.

    This year, most of those deals have happened in healthcare, which is in the midst of an unprecedented bout of deal-making. More than a $153 billion worth of deals have already been announced so far this year in the sector, the highest since Thomson Reuters began tracking data. Several more are in the works, and many of those have tax arbitrage as one of the crucial drivers for the transaction as well.

    As the industry had feared, Pfizer's plans have triggered concerns in Washington, with lawmakers calling for comprehensive tax reform. On Wednesday, a U.S. Treasury official said the Obama administration is seeking ways to curb tax-dodging by U.S. businesses that reincorporate overseas.

    "Inversion transactions illustrate the need for comprehensive business tax reform that would lower corporate tax rates and limit the ability of multinationals to shift income outside the U.S.," the Treasury official said, noting that the administration knows such deals "are occurring and aren't being caught by the current rules."

    Analysts and lawmakers say the chances of Congress passing a new law anytime before the November mid-term U.S. elections are slim..."

    Sentiment: Buy

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