Report: Offshore tax deals on the rise

U.S. companies have become more likely to shift their legal address abroad for tax purposes in recent years, according to a new report, even as those deals constitute just a small percentage of corporate mergers.


S&P Capital IQ found that 35 companies have either gone overseas or announced their intention to do so since 2009, roughly twice as many as the period between 1994 and 2000.

S&P chalked that increase in so-called inversions up at least in part to the increasingly global landscape for business.

“As U.S. companies must now operate in a more competitive global marketplace, they've had to adjust their business plans to stay competitive,” said the report, released Thursday.

President Obama and top congressional Democrats have become increasingly critical of companies that move offshore, with the president dubbing them “corporate deserters” in a speech this summer. The Congressional Research Service has also found an uptick in inversions in recent years.

Democrats are pushing for legislation to curb the moves. But with Republicans not showing much interest, the Obama administration is preparing administrative actions to potentially make the deals less attractive.

S&P also found that some U.S. companies that reincorporate abroad eventually head back to America, “suggesting that greater global forces” than just taxes played a role in the deals.

The group added that seven of the 518 corporate mergers or acquisitions, or 1.4 percent, over the last year had been inversions.

Inversion deals accounted for around 5 percent of the cash value of mergers and acquisitions this year.

But the vast majority of that value, roughly five out of every six dollars, came from two deals involving the medical device maker Medtronic and the pharmaceutical company AbbVie.