Investor urges sell on off shore tax firms

Billionaire with links to Obama comes out against firms that shift HQs overseas

President Barack Obama and owner Mark Cuban participating in an event  at the White House. Photograph: Mark Wilson/Getty Images

President Barack Obama and owner Mark Cuban participating in an event at the White House. Photograph: Mark Wilson/Getty Images

Mon, Jul 28, 2014, 07:58

A billionaire media tycoon with close links to US president Barack Obama has urged investors to sell the shares of companies that shift their headquarters to countries such as Ireland to cut their tax bills.

The pointed remarks over the weekend by Mark Cuban, owner of the Landmark Theatres cinema chain and the film distributor Magnolia Pictures, will add fuel to the debate raging in the US over so-called tax “inversion deals”.

With such inversion arrangements, US firms buy a smaller company, often headquartered in Ireland, and shift their domicile to this country to avail of our lower 12.5 per cent corporation tax rate.

Mr Obama last week stoked the debate by suggesting such companies were “economic deserters” and “unpatriotic” to the US. He specifically referenced Ireland, sparking dismay among politicians here.

“If you acquire a small company in Ireland to take advantage of the low tax rate [and] you start saying, ‘we are now magically an Irish company’, despite the fact that you might have only 100 employees there and you have got 10,000 employees in the US, you are just gaming the system,” he said.

Mr Cuban, a close ally of the president, made a series of statements in recent days defending and expanding upon the president’s comments.

Tax bills

He said tax inversion deals hiked the tax bills of other US companies and citizens.

“If I own stock in your company and you move offshore for tax reasons, I’m selling your stock. There are enough investment choices here,” said Mr Cuban, who also owns the Dallas Mavericks basketball team and stars in Shark Tank, a US business reality show similar to Dragon’s Den.

“When companies move offshore to save on taxes, you and I make up the tax shortfall elsewhere. Sell those stocks and they won’t move,” he added.

“Are you willing to call your broker or fund and tell them to sell companies that increase your tax bill by moving overseas?”

It was suggested yesterday that US companies that recently concluded or announced inversion deals in Ireland have had $1 billion (€745 million) wiped from their market value since Mr Obama criticised them.

A report in the Sunday Times said US multinationals Perrigo and Medtronic have had more than $500 million wiped from their values. Endo International, Actavis and Jazz Pharmaceuticals have also seen their values decline.