Businesses are making their way out of Colorado and other states. Actavis, a Fortune 500 drug maker that specializes in generic pharmaceuticals, is the latest major company to relocate a portion of its operations in pursuit of a lower tax rate. The company acquired Warner Chilcott, located in Ireland. The business acquisition is the most recent in a string a moves the pharmaceutical manufacturer has made which have included a merger and a name change. Actavis plans to move much of its operations to Ireland, though the top executives will remain in New Jersey.
The strategy of relocating operations to a country with a more favorable tax rate has been a recent point of contention in the Senate. Tech giant Apple has also moved a portion of its operations to Ireland in the interest of qualifying for the country’s lower tax rate. A Senate inquiry revealed that Apple has allegedly saved billions in taxes with the move. However, Apple’s CEO argues that his company pays a substantial amount in U.S. taxes. Nevertheless, findings of the Senate investigation suggest that Apple has structures in place that allow the company to pay little or no taxes in any country.
The CEO of Actavis has indicated that the issue of corporate taxes resonates with him. A study by the CATO Institute revealed that of the 90 countries examined, the U.S. had the fourth highest corporate tax rate at 35.6 percent. An Ernst & Young study indicated that 46 Fortune Global 500 companies have relocated from the U.S. in the past 11 years. As of 2013, 21 S&P 500 companies have changed to overseas headquarters.
Tax is an issue that affects all corporations. Relocating operations is just one strategy that may reduce tax burden. Many large corporations seek out the assistance of an experienced corporate lawyer to help determine other ways of reducing tax expenditures.
Source: Insurance Journal, “New York, Pennsylvania Rank High for Opioids Among Injured Workers”, Young Ha, May 20, 2013