Legal analysts say regulations adopted by the U.S. Department of the Treasury and Internal Revenue Service to reduce corporate inversions will temporarily benefit Delaware, but tax reform is the only long-term solution to combat the uptick in corporations leaving the state for foreign jurisdictions.
An inversion is a U.S. company reincorporating in a foreign jurisdiction after a merger or acquisition with an entity in another country. The transactions are structured to reduce the corporation’s federal corporate taxes. For example, Salix Pharmaceuticals will lower its corporate tax rate from the current U.S.-based tax rate in the high 30 percent range to Ireland’s rate in the low 20 percent range, once it completes its $2.7 billion merger with an Irish affiliate of Cosmo Pharmaceuticals SpA.
