Medtronic can duck billions of dollars in taxes with Irish deal
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Medtronic estimates moving its headquarters to Ireland for tax purposes could help it avoid several billion dollars in U.S. taxes.
Medtronic, which started in a Minneapolis garage, struck a $43 billion deal earlier this month to buy Ireland-based health care company Covidien. The purchase gives Medtronic firm the option to become an Irish company.
When Medtronic officials announced the combination with Covidien, they said the move was driven by the strategic fit between the two companies. Combined, the two firms will be able to offer hospitals and other customers everything from pacemakers and insulin pumps to brain scanners and surgical staples.
The medical device maker says it's holding about $14 billion in profits earned by its foreign operations. If it were to bring that money back to the U.S. now, Medtronic could get hit with up to $4 billion in federal taxes. But if Medtronic succeeds with its plan to be domiciled in Ireland for tax purposes, the company says it can put the foreign profits to work in the U.S. while avoiding a big tax bill from Uncle Sam, according to Rob Clark, a company spokesman.
"This is really the conundrum of the current U.S. tax. We have more flexibility to take that cash and invest in the U.S. as an Irish company than we would have as a U.S. company," he said.
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