Pfizer, one of the world’s largest pharmaceutical company is making a deal with a rival drug maker Allergan, to buy them for just about $150 billion. If this deal does go through, it would be one of the smartest moves Pfizer has made. Pfizer’s main motive towards buying Allergan is to reduce it’s tax bill. Last year, Pfizer’s tax rate was 26.5% while Allergan’s had and effective tax rate of 4.8%. According to the data given up, this seems like an ideal move for Pfizer.
Pfizer’s plan would be to move their corporate citizenship abroad to Dublin, therefore reducing their tax bills. In my opinion this move is highly valued and should be done. Pfizer is not only looking at the tax reductions, but also at synergies in a new merger and seeking out new drugs. This would help them expand their already massive drug empire. Although Pfizer’s taxes would be reduced, the United States taxes the worldwide income of it’s domestic companies and so Pfizer would still be paying a tax, but the move could make it slightly less. But we do have to keep in mind that Pfizer tried a tax inversion with AstraZeneca which ended up being unsuccessful and brought up a lot of controversy. So they would have to be careful for the authorities not to be investigating them.
