Medtronic Says Inversion Actions to Have No Impact
Posted
Jordan Fouts-
The Treasury Department Thursday announced its intent to reduce tax benefits available to companies that have inverted – combined with a foreign business to create a parent company overseas – and to make future inversions more difficult. The Treasury said in a statement Thursday that, though current law applies potentially adverse tax consequences to many inversions undertaken primarily to avoid U.S. taxes, the continued practice of inversion indicates that many corporations deem the consequences acceptable in light of the potential tax benefits. The Treasury and White House both attempted to crack down on the practice last year after at least 15 U.S. companies struck deals, with President Barack Obama characterizing inversion as “unpatriotic.” Notable cases last year include Burger King’s acquisition of Canadian coffee chain Tim Hortons and Medtronic’s buy of Irish medical device maker Covidien. Other major companies announced or attempted inversion deals, including drugmaker Pfizer and agribusiness Monsanto. Measures the Treasury announced, which apply to deals closed on or after Thursday, include limiting a U.S. company’s ability to merge with a foreign rival and move its tax domicile to a third country solely to lower tax liabilities; making it harder for companies to inflate the size of foreign acquirers so their deals can qualify as inversions; and requiring the new foreign parent to be a tax resident of the country where it is created. A further move preventing inverted companies from transferring foreign operations “out from under” the U.S. tax net without paying current U.S. tax applies to inversions completed on or after Sept. 22, 2014. In a letter to lawmakers Wednesday, Treasury Secretary Jack Lew also called for stronger legislation on inversion, noting that the Treasury cannot stop inversions without new statutory authority. Medtronic, which moved from Minnesota to Dublin, Ireland, when it became Medtronic plc, said in a statement today that the Treasury’s announced actions “do not have a material financial impact on the company.” “Medtronic's acquisition of Covidien, which closed in January of 2015, was undertaken for strategic reasons and has created a company that is positively impacting the lives of more patients, in more ways and in more places around the world,” the company claims.
