Pfizer Inc. (NYSE:PFE) has been pursuing a strategic merger with Allergan, which has created fears that the company might be trying to evade paying $35 billion in taxes. The news was highlighted in a report by a group that campaigns for tax fairness. The group was joined by four democratic members of the congress, who have been urging the President to deny US companies’ tax benefits, if they move their tax address outside the country.
As per the report, Pfizer is expected to move its tax address to Dublin, after completing the merger with Allergan Plc. However, since the move does not count as in inversion, it would be able to bypass a new ruling, which aims to limit the benefits of corporate inversions.
Joan Campion, the spokeswoman for Pfizer, stated that the merger was aimed at creating a global R&D focused company. She also assured that the majority of operations would still be conducted in the US. However, the company had recently announced that it had a deferred tax liability of $21.1 billion. Added to this, PFE also has $74 billion in international earnings, which it intends to keep out of the US.
Pfizer has recently gained approval from the FDA for its Xeljanz XR, for the treatment of rheumatoid arthritis. The drug is the only one of its kind available for the treatment of RA, but is only administered after initial treatments fail. The drug is already approved in 45 other countries. However, the news failed to lift the stock, which has underperformed, since the start of the year.
Some accountants still believe that the tax figure is not accurate. This is because the figures are based on the assumption that PFE would have brought the $74 billion earnings to the US. The company did not have plans to do so. Additionally, PFE still has the right to utilize its $21.1 billion deferred tax liability.
Pfizer Inc. (NYSE:PFE) had a trade volume of 52.04 million and gained 1.93% during the February 25 trading session, to reach a close at $30.60.