WALGREENS has abandoned plans to controversially shift its tax base out of the US after management and advisers were unable to find a structure that would stand up to scrutiny.
The US pharmaceutical giant had been expected to shift its tax base to the UK following the completion of its acquisition of the remaining 55% of Alliance Boots.
While making the shift out of the US to pay tax at a lower rate is not yet blocked, the direction of travel indicated by US politicians on the matter has apparently made a move too risky.
In a statement, Walgreen’s president and CEO Greg Wasson said it had taken “extensive analysis” alongside a special committee of independent directors and tax advisers, concluding that a tax ‘inversion’ structure could not be arrived at that would stand up to IRS scrutiny.
“The company also was mindful of the ongoing public reaction to a potential inversion and Walgreens unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,” the company said.
Walgreens will remain headquartered in Deerfield, Illinois, with Boots based at its current Nottingham location.
A number of Walgreens shareholders, including Goldman Sachs, have urged the business to redomicile its tax base. The aborted move will also place pressure on other US companies looking to shift their base abroad. Shire is lined up for takeover by US pharma Abbvie, with Abbvie considering moving its HQ to the UK.
Tax breaks are a very enticing incentive for developing and managing a green management strategy, writes Graham Jarvis
What can you do to ensure your employees know the company policy and stick to it? Hear from other CFOs and experts in our free-to-view video
The quality of reporting by the UK’s top public companies has slowed despite greater economic uncertainty and increased investor demands for better disclosure, new research has found
Boards must step up their focus on corporate culture and work to foster longer-term goals if they want to win back public trust and ensure sustainable businesses, the UK accountancy regulator said