U.S. companies are increasingly viewing the U.K. as a place to relocate to pare their tax bills.
Why? Relatively low tax rates and a business-friendly environment.
Pfizer (PFE, Fortune 500) was the latest high-profile example; it tried to take over the British pharmaceutical firm AstraZeneca (AZN).
American and French media giants Omnicom (OMC,Fortune 500) and Publicis (PGPEF) also planned a mega-merger that would have seen the new firm domiciled in the U.K., though the deal was scuppered.
Meanwhile, the British-based InterContinental Hotels (IHG) was reportedly approached by a U.S. suitor who may have been looking to take advantage of a more favorable U.K. tax system.
British corporate tax rates are near 20%. In the U.S., rates are closer to 40% -- among the highest in the developed world.
The U.S. also levies high taxes on income that's earned abroad and brought back -- or repatriated -- to the States.
The U.K. rules are not as strict, allowing money to flow home without so many tax hassles, said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.
"The basic point is that the U.S. corporate tax system is the most onerous amongst the advanced countries," Hufbauer said. About $1.6 trillion in foreign earnings have been left overseas to avoid U.S. taxes, he added.
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