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Pfizer-Allergan merger scrapped after Obama cracks down on tax breaks

How some companies dodge taxes

A massive $150 billion merger between Pfizer and Allergan has been called off after the Obama administration issued new rules designed to crack down on corporate tax avoidance.

The pharmaceutical tie-up was designed to allow New York-based Pfizer (PFE) to move its corporate headquarters to Ireland, and possibly reduce its tax bill. If completed, it would have been the second-largest merger in history.

The takeover was an example of an "inversion," a maneuver by which a U.S. multinational merges with a foreign company and changes its legal tax residence to another country with a lower tax rate.

New rules issued by the U.S. Treasury on Monday seek to discourage inversions. They change how the...


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