(English) Calling a Spade a Spade: Medtronic buying Covidien is above all, a tax ploy.

By Alvaro Tomas, lawyer of MMG Trust, part of the Morgan & Morgan Group

With the deal, announced on Sunday, the Minneapolis-based Medtronic becomes the latest — and biggest — United States company to try to change its tax domicile through a so-called inversion. Such deals are attractive to American companies seeking a lower corporate tax rate (Gelles,David, New York Times,16^th June, 2014).*

With all its FATCA and coercion of foreign banks and financial institutions to act as their collection agents, or even worse as snitches, the United States,  Internal Revenue Service cannot  ignore all the legally accepted ways companies are able and entitled to lower their tax rates. Much as the government has the right to collect what it deems correct, the private sector has the same right to use the law in its favor, regardless of what the government may think is morally acceptable.  While the government can only do what the law permits, the private sector can do whatever is not expressly prohibited by law.   But the United Sates and the OCDE countries, in their zealous and unjust attacks on sovereign countries, constantly overstep the boundaries of international and commercial law. Yet, when their own companies like Google, Apple and now Medtronic, use totally legal maneuvers to mitigate their fiscal liabilities, Angel Gurría of the OCDE says nothing and only   Minnesota Senator Al Franken, dares speak his mind:

“This proposed deal could bring as many as a thousand jobs to Minnesota and increase investment in our state, which would be great,” Mr. Franken said. “That said, deals that result in companies reincorporating abroad often mean that they can shelter profits overseas, costing taxpayers billions of dollars — which I find troubling. This needs careful scrutiny, and I plan to take a very close look at the specifics in the coming days.”

You see, Medtronic has found a legal and, yes, very moral way to pay less taxes in the United States and free all that cash made on foreign operations: it is buying an Irish company and changing its tax domicile.  Franken can speak and scrutinize all he wants, the U.S. holds it as legal.

There is more than US$2 trillion in the coffers of American companies who have chosen NOT to pay taxes in the United States. It is as simple as that. Only a few like eBay, that repatriated US$9 billion few years ago, have done the “moral” thing. In view of this reality and the ever-changing goal posts in this “everybody should help us collect taxes” saga, US lawmakers are now considering a tax holiday whereby these American multinationals can repatriate their cash without paying U.S. taxes.

Well, what would the IRS and Angel Gurría think if we, small but sovereign countries, declare a permanent tax holiday? Why doesn´t Gurría force the European Union to penalize Ireland for attracting big multinationals to its country on the sole basis of a more beneficial tax regime?  Isn’t that what all the countries are trying to do: compete for the Foreign Direct Investments (FDI) which create jobs and generate development? Panama is no different from Ireland. Yet Gurría and the OCDE cartel, taking orders from their G-7 masters, want to impede Panama’s right as a sovereign country to attract the Medtronics of the world by slapping us with pejorative  labels and including us on tax haven lists.  This is  not only morally wrong but it subverts the concept of a level playing field  which our small but proud nations require to compete for the FDI and keep growing.

* Source:https://dealbook.nytimes.com/2014/06/16/in-medtronics-deal-for-covidien-an-emphasis-on-tax-savings/?_php=true&_type=blogs&partner=rss&emc=rss&smid=tw-nytimes&_r=0