Ireland Doesn’t Want U.S. Corporate Tax Dodgers...Either

The Obama Administration lowered the boom this week on those companies seeking to relocate outside of the U.S.  in order to avoid or lessen a hefty tax bill.

On Tuesday the U.S. Treasury Department rolled out proposed rules that would make so-called corporate tax inversions more difficult. The following day President Obama made it loud and clear in a press briefing he’s had it with American companies fleeing to foreign lands. Then hours later the $160 billion Pfizer-Allergan deal was dead in the water as the two companies terminated the merger.

Caught in the crosshairs; Ireland whose corporate tax rate is about 12.5% compared to America’s 39%. The Pfizer-Allergan deal would have re-located the combined company to Dublin, yet Ireland’s Department of Finance tells FOXBusiness.com, it does not encourage “brass-plate operations”, only those that create real economic growth such as job creation.

“In relation to any transactions that may not involve real substance in terms of jobs and investment in the Irish economy, Ireland does not encourage such transactions,” said Ireland Department of Finance spokesperson David Byrne to FOXBusiness.com.  He added, “We only have and want real substantive FDI [Foreign Direct Investment] – the kind that brings real jobs and investment into Ireland.”

The proposed rules from Treasury are aimed at curbing inversions and so-called earnings stripping which enables a company to minimize U.S. taxes by paying deductible interest to their new foreign parent, as explained by Treasury.

In a statement Byrne said that the Ireland’s Department of Finance, “examined whether there are any targeted changes that could be made to the Irish tax regime to discourage this activity and that it would be difficult to design a measure that would not infringe EU law or have potential unintended consequences for substantive Irish operations.”

Ireland isn’t the only country that U.S. corporations are eyeing. In 2014 Abbvie (NYSE: ABBV) and Shire (NASDAQ:SHPG) had planned to combine in a $54 billion deal that would have moved the company to the U.K., the deal was scrapped due to tax challenges. However, medical device makers Cyberonics and Sorin Spa were successful, completing a $2.7 billion dollar deal last year which created a new entity, LivaNova PLC (NASDAQ:LIVN), which is run out of the U.K. And, in 2014, pharma companies Mylan Labs and Abbott Labs (NYSE:ABT) completed a deal valued at nearly $6 billion, which has the company based in the Netherlands whose corporate tax rate is about 25%.

For now the President’s message, while direct, still needs a sign-off from Congress. “While the Treasury Department actions will make it more difficult and less lucrative for companies to exploit this particular corporate inversions loophole, only Congress can close it for good, and only Congress can make sure that all the other loopholes that are being taken advantage of are closed,” said President Obama during his press conference on Wednesday.

As for the Irish Government they plan do their part; “The Irish Government has made clear that we would welcome any changes made by the US administration to address this problem.” Said Byrne.