Shire has announced plans to move its tax base to the Republic of Ireland, a shift which will see the firm pay significantly less to the UK Treasury in the future.
The new arrangement involves the creation of a new UK-listed, Jersey-incorporated holding company for the group. However, it will not result in any changes “in the day to day conduct of Shire’s business, its strategy or dividend policy”, the company said.
Shire Limited will have its primary listing on the London Stock Exchange and its American Depositary Shares will be traded on the Nasdaq. The proposals are not expected to result in any job losses or relocation of existing personnel out of the UK, the firm added.
Explaining the decision, Shire said that “through a series of transactions over the last ten years”, the group “has been transformed from a primarily UK business to an international business, with the vast majority of its revenues generated from outside the UK”. As such, it claims that the firm and its shareholders “would be better served by having an international holding company with a group structure that is designed to help protect the group’s taxation position”. Therefore “the most appropriate structure” is for the new
company to be tax-resident in the Republic of Ireland.
The move means that Shire will be able to avoid any increases in UK taxes and pay less on international sales, though it is causing concerns in circles. Industry chiefs fear that other companies will follow suit in response to what is seen by some as an uncompetitive corporate tax system that currently exists in the UK.
The move has to be approved at a High Court hearing and Emergency General Meeting, both of which will be held on May 9, and the last day of trading of Shire ordinary shares will be May 22.
