American Tax Inversion and the NAM

NAMs need to keep in touch with the practice of US firms relocating their headquarters via acquisition of smaller players to countries such as Ireland where corporate tax rates are lower to avoid taxes in the US.

A major development took place yesterday via a speech by US president Barack Obama where he castigated American companies for “gaming the system” and signaled US determination to act against the process.

This is all part of a worldwide government and consumer backlash against tax avoidance by major companies.

These accelerating tax inversion moves affect the NAM role in three ways:

• Suppliers: If the NAM’s company - or a competitor – is in the process of making a tax inversion move, US growing resistance will become an increasing distraction to top management and thus the NAM day-job…
• Retailers: Possible acceleration of moves like Walgreens’ takeover of Alliance Boots, impacting the roles of both Boots NAMs and NAMs of competing retailers
• Consumers: The growing consumer backlash has already resulted in demonstrations against major companies such as Starbucks and may eventually affect the brands of those companies suspected of paying less than their fair share of tax…  

Action:
Best to keep in touch with developments, reassess your relative competitive appeal after each significant move and factor the result into your trade strategies, despite the distraction…