Linde
Tyco Int.
Tim Hortons
target
10.3
6.6
6.4
6.3
3.4
Coca-Cola
Coca-Cola
GTECH SpA
Progressive Waste Solutions
IHS
Coca-Cola
Iberian Partners
Int. Game Technology
Markit
Coca-Cola Erfrischungsgetraenke
Waste Connections
Top 10 tax inversions from 2013 to 2016 by value, in billions of dollars
$53.5
42.5
25.1
20.8
13.3
acquirer
Praxair
Medtronic
Burger King Worldwide
Liberty Global
Johnson Controls
Covidien
Linde
Virgin Media
target
Tyco Int.
Tim Hortons
10.3
6.6
6.4
6.3
3.4
Coca-Cola
Progressive Waste Solutions
IHS
Coca-Cola
GTECH SpA
Coca-Cola
Iberian Partners
Markit
Int. Game Technology
Coca-Cola Erfrischungsgetraenke
Waste Connections
Top 10 tax inversions from 2013 to 2016 by value, in billions of dollars
$53.5
42.5
25.1
20.8
13.3
acquirer
Burger King Worldwide
Liberty Global
Praxair
Johnson Controls
Medtronic
Covidien
Virgin Media
Linde
Tyco Int.
Tim Hortons
target
10.3
6.6
6.4
6.3
3.4
Coca-Cola
Coca-Cola
Progressive Waste Solutions
IHS
GTECH SpA
Coca-Cola
Iberian Partners
Markit
Coca-Cola Erfrischungsgetraenke
Int. Game Technology
Waste Connections
Top 10 tax inversions from 2013 to 2016 by value, in billions of dollars
$53.5
42.5
25.1
acquirer
Liberty Global
Praxair
Medtronic
Covidien
Virgin Media
Linde
target
20.8
13.3
10.3
Johnson Controls
Burger King Worldwide
Progressive Waste Solutions
Tyco Int.
Tim Hortons
Waste
Connections
6.6
6.4
6.3
3.4
GTECH
SpA
Coca-Cola
IHS
Coca-Cola
Markit
Coca-Cola Erfrischungsgetraenke
Coca-Cola
Iberian
Partners
Int. Game Technology
The inversions drew the ire of Washington for cutting into U.S. tax revenue. In April 2016, the Obama administration issued rules designed to discourage the moves, including one that scuttled a $150 billion merger with
PLC that
Pfizer
Inc.
had pursued to relocate its tax home to Ireland, where the corporate tax rate is a comparatively low 12.5%.
The new U.S. tax law doesnât target already-inverted companies specifically, tax experts and companies say. But it restricts things like interest deductions on which inverted companies rely heavily.
The provision known as the Base Erosion and Anti-Abuse Tax limits the degree to which big companies can deduct interest expenses and royalties that U.S. subsidiaries pay to their foreign parents. Another measure caps how much interest a company can deduct to 30% of their earnings before interest, taxes, depreciation and amortization.
Such provisions will bring the bills for some inverted and other foreign companies that shelter U.S. earnings closer to what U.S.-based rivals owe, according to
Bret Wells,
a tax professor at the University of Houston Law Center.
Congress estimated the base-erosion provision would bring in $150 billion in new tax receipts over 10 years, and the interest-expense cap would raise another $253 billion.
, a manufacturer of electrical gear and truck transmissions that relocated its tax headquarters to Dublin from Cleveland after a 2012 deal, said on an earnings call its effective tax rate will go up by at least two percentage points to between 13% and 15% this year, and then stabilize between 14% and 16% in subsequent years.
Likewise, Johnson Controls, which merged with manufacturing rival Tyco International in 2016 partly to move its tax home to Ireland, said it expects its effective tax rate to increase two to four percentage points starting in fiscal year 2019 under the tax law.
Some inverted companies with heavy U.S. sales could benefit as much as U.S.-based companies from the overall reduction in corporate taxes, and offset the hit from the profit-sheltering provisions, tax experts and companies say.
Under the law, U.S. earnings will be taxed at a 21% rate, down from 35%. Citing the lower rate,
PLC, a drug company based in the U.K. but with about 90% of its sales in the U.S., said it expects the law to be âneutral to slightly positive.â
Mallinckrodt said in a recent securities filing it would get a $450 million to $500 million deferred tax benefit from the lower U.S. corporate rate, which would âmostly be offsetâ by the new limitations on interest-expense deductions.
Similarly, Allergan, a drug company that moved its headquarters to Ireland after a 2013 acquisition but gets about 80% of revenue in the U.S., expects the loss of deductions on intercompany loans will largely be balanced out by lower taxes on its U.S. sales.
âA company like Allergan, which has a lot of income in the U.S., benefits from U.S. tax reform,â
Brent Saunders,
chief executive of the Dublin-based drug company, said in an interview.
Mr. Saunders said he didnât expect Allergan would return its headquarters to the U.S. because of the tax law. âIreland is an important place for us,â he said. What the U.S. tax law âcould do is make the U.S. market more attractive as a place for investment.â
âPeter Loftus contributed to this article.
Write to Jonathan D. Rockoff at Jonathan.Rockoff@wsj.com and Nina Trentmann at Nina.Trentmann@wsj.com
