Medtronic: Sweet Home Ireland

Medtronic, Covidien in Advanced Talks to Combine - Deal, Valued at More Than $40 Billion, Would Be Structured as So-Called Tax Inversion
Excerpt:

Medical-device maker Medtronic Inc. is in advanced talks to combine with rival Covidien PLC in a deal valued at more than $40 billion, according to people familiar with the matter. The deal, which could be announced Monday, would be structured as a so-called tax inversion, according to one of the people. In such deals, acquirers buy companies domiciled in countries with lower corporate tax rates than their own as a means of lowering their overall rate. Covidien is based in Ireland, which is known for having a relatively low tax rate.

Comment: Corporate Inversion defined:

Re-incorporating a company overseas in order to reduce the tax burden on income earned abroad. Corporate inversion as a strategy is used by companies that receive a significant portion of their income from foreign sources, since that income is taxed both abroad and in the country of incorporation. Companies undertaking this strategy are likely to select a country that has lower tax rates and less stringent corporate governance requirements.

Comments: Others domiciled in Ireland: Accenture, Seagate. The problem: High US Corporate tax rates.