Apr 16 2008

Adderall the Taxes, Time for Shireland

Posted by cheyennejack at 7:23 PM
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- Categories: Healthcare

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After shareholder and court approval Shire will make the move to become a subsidiary of Shire Limited.  This new holding company will allow them to avoid large UK taxes in favor of the tax haven of Jersey paying substantially less to the Republic of Ireland. The group will remain based in the UK and the move will not result in job cuts, affect strategy or even day-to-day operations.

Now I'm not a tax expert, especially internationally, but this seems like an interesting move.  Apparently Shire does approximately 75% of business in North America under Shire Laboratories, that developed the drug Adderall a key player in the ADHD market.

There have been proposed amendents to UK tax law which could lead to a corporation tax hike of greater than 30% for income generated abroad.  That turns out to be quite a bit, considering they reported $2.44 billon in revenue last year, with 90% of business being generated abroad.

Some are wondering if there will be backlash against the company founded in Hampshire in 1986. Really? Why?  Does not a smart company owe its employees and shareholders the best possible management strategy? If it changes very little in the way of strategy, jobs and operations, yet saves millions of dollars, isn't that the best move. Why is it a bad move if you aren't allowing your spend-heavy tax-hungry government to gut your business. This sounds like its a problem created by the UK government hiking taxes up so high that they managed to chase off their own homegrown #3 drugmaker, drying up that money-well completely by squeezing it so hard it slipped off to a neighboring country, more than willing to extend a helping hand and reasonable rates.

Sounds more like a well-calculated civilized Boston Tea Party 250 years later. It makes me wonder if more internationally-mobile firms will follow suit if Prime Minister Gordon Brown continues with plans to change tax codes that affect entrepreneurs.

It also makes me wonder if this news or future company exodus movements from the UK will help make a splash over in the US. With movements like the fair tax act gaining momentum and the battle for the white house rounding the corner, how will this affect our political climate? Is it Britain's National Health Service (NHS - aka universal healthcare) system that is making the government so hungry for money that it has no other choice than to cannabalize and eat away at its own financial backbone eating itself away? Maybe its some other programs.

Either way it will be interesting to see what. if anything, Barack or Hillary have to learn and say about this situation. Does John McCain have an answer? What do you think?


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