After big spending and hard lobbying, Pfizer eyes new tax home
By Susan Cornwell and Diane Bartz
WASHINGTON (Reuters) - Pfizer Chief Executive Ian Read, who has been lobbying Congress regularly for a corporate tax cut, is trying for the second time in as many years to do a deal with a foreign company that could produce the savings he has been unable to extract from Washington.
Pfizer Inc (PFE.N: Quote), which is pursuing a deal for Dublin-based Allergan Plc (AGN.N: Quote), was one of the top spenders among pharmaceutical companies lobbying the U.S. government in 2014, according to data from the Center for Responsive Politics.
But while Read has convinced some U.S. lawmakers that a U.S. corporate tax rate of 35 percent puts them at disadvantage to global rivals, having no tax reform on the near horizon has propelled the largest U.S. drugmaker into pursuing a tax-cutting merger overseas, people close to Pfizer said.
"Ian Reed has been very active... in telling Congress the risk of having an anti-competitive tax structure," said a source close to the company, who asked not to be named because she was not authorized to discuss the matter publicly. "Ian has been to Washington, had meetings in New York, he's been to the White House, he's been on the Hill, in the last two years it's got be seven or eight times, just on encouraging tax reform."
Pfizer and Allergan said last week that they were in friendly merger talks to create what would be the world's biggest drug company. While no other details were available, Pfizer is discussing a tax inversion, in which U.S. companies relocate overseas to take advantage of lower tax rates abroad, sources have told Reuters.
The talks come a year after Pfizer failed to buy British drugmaker AstraZeneca Plc (AZN.L: Quote) over a disagreement on price. That deal also would have allowed Pfizer to reincorporate in Britain and pay a significantly lower corporate tax.
While the latest merger move has sparked fresh inquiry into the controversial tax maneuver, lobbyists and analysts said it's unlikely that either the Obama administration or Congress would throw up serious obstacles.
With the 2016 presidential election just one year away, bipartisan agreement in Congress on a subject as controversial and complicated as corporate tax reform seems unlikely. Continued...