Ace named on US Congress corporate inversion list but why?
Newly published research by the US Congress claims that 76 companies have shifted their corporate domiciles away from the US since 1983 — one of them being Ace Ltd.
Such domicile shifts are referred to as “inversions” and have been causing concern among some US politicians this year, as several US firms have explored mergers with Swiss or British firms to slash their US tax bill.
At least 14 of the companies on the list produced by the Congressional Research Service (CRS) — including Tyco, Weatherford International, Foster Wheeler and Everest Re — did move from the US to Bermuda, but most have since redomiciled elsewhere, most of them to Switzerland or Ireland.
However, Ace was never a US company. It started operations in Bermuda in the mid-1980s and set up its holding company in the Cayman Islands. It relocated from Cayman to Switzerland in 2008 — the year cited by the US Congress list for its inversion.
The CRS said it had found 47 inversions had been done in the past decade and more are in the works.
“Barely a week seems to pass without news that another corporation plans to move its address overseas simply to avoid paying its fair share of US taxes,” said Democratic Representative Sander Levin, ranking member of the House of Representatives Ways and Means Committee in a statement.
The Royal Gazette was unable to contact a representative of the CSR last night and we received no comment on the matter from Ace by press time.
Medical technology group Medtronic Inc said last month that it plans to buy Covidien Plc, a formerly Bermuda-based company now domiciled in low-tax Ireland. Analysts said the deal was driven, at least in part, by tax considerations.
The research service said other inversions have been done in the past decade by Mallinckrodt Pharmaceuticals, Perrigo Co Plc, Actavis Plc and other companies, many of them rebasing for tax purposes to Ireland.
For once, Bermuda is not the focus of the Washington concern, but rather European jurisdictions.
In a related matter, Reuters reported that international law firm Cadwalader, Wickersham & Taft said in a statement that one of its top partners met on June 27 in Dublin with Irish Prime Minister Enda Kenny and discussed US-to-Ireland inversions.
“The country’s tax regime is coming under increasing scrutiny by the EU for the aggressive tax planning strategies undertaken by foreign multinationals,” sometimes known as “brass-plating” deals, Cadwalader said in a statement.
Brass-plating refers to inversions in which a US company’s relocation means chiefly a new street address and little if any additional jobs or development for the new host country.
“It is important that US and other multinational corporations seeking to re-incorporate in Ireland do so with an eye towards making meaningful connections with the country,” Cadwalader said.
Other recent inversions have been structured to set up new tax domiciles in Britain, the Netherlands and Switzerland.
Levin has offered proposals to limit inversions, seen by lawmakers as eroding the US tax base. Other lawmakers and the Obama administration have also offered proposals, but analysts said it was unlikely any would become law this year.
Illinois Democratic Senator Richard Durbin on June 25 told Reuters he hoped drugstore chain Walgreen Co, based in his state, would not do a potential inversion into Swiss-based retailer Alliance Boots Holding Ltd.
Walgreen has said it will do what is in the best interest of the company and its shareholders.
For the Congressional Research Service’s list of inversions since 1983, see http://democrats.waysandmeans.house.gov/timeline-20-years-corporate-inversions
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