(Adds comment by Treasury official, background)
By Kevin Drawbaugh
April 30 (Reuters) - The Obama administration is focused on finding ways to curb tax-motivated reincorporations to other countries by U.S. businesses, a U.S. Treasury official told Reuters on Wednesday.
"Cracking down on companies that reincorporate overseas to reduce their U.S. taxes is a priority for the administration," a Treasury official said in an emailed statement.
U.S. drugmaker Pfizer Inc said on Monday it has made takeover bids for UK rival AstraZeneca Plc in a possible deal to merge the two into a UK holding company with a UK tax domicile. The proposed deal would keep the operational headquarters in New York.
Such deals, known as "inversion" transactions have been growing in popularity, and President Barack Obama's 2015 budget included a proposal to crack down on inversions. But with the U.S. Congress deadlocked over tax-and-spending policy, the chances of the inversion rule proposal becoming law soon were slim.
"Inversion transactions illustrate the need for comprehensive business tax reform that would lower corporate tax rates and limit the ability of multinationals to shift income outside the U.S.," the Treasury official said, noting that the administration knows such deals "are occurring and aren't being caught by the current rules."
About 50 U.S. companies have done similar "inversion" transactions in the past 30 years, in which they relocate their tax residences to lower-tax countries via corporate deals. About half of these transactions have occurred since 2008.
Omnicom Group Inc, the biggest U.S. advertising company, is in the midst of a trying to merge with French rival Publicis Groupe SA into a Netherlands-based holding company with a UK tax domicile, though the deal has encountered delays.
The Obama proposal would tighten tax rules to make inversions more difficult to carry out.
The U.S. Internal Revenue Service on Friday issued a notice limiting shareholders' tax-free treatment in inversions. (Reporting by Kevin Drawbaugh; Editing by Howard Goller and Leslie Adler)
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