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IHS Agrees Inversion To UK

by Mike Godfrey,, Washington

23 March 2016

The information services providers, Colorado-based IHS Inc. and London-based Markit Ltd, have agreed to merge, in what is widely being seen as another "tax inversion" transaction.

Under the terms of the proposed USD13bn transaction, the worldwide businesses of IHS and Markit will be combined with the name of IHS Markit. The new group will retain certain key operations based in Englewood, Colorado, but will be headquartered in London. Its tax domicile will be in the United Kingdom.

The transaction is expected to be completed in the second half of 2016. IHS shareholders are expected to own approximately 57 percent of the combined company, with current Markit shareholders owning the remaining 43 percent.

Tax inversion techniques are being used by some US multinationals to move their tax residences abroad – away from the high 35 percent US headline federal corporate tax rate.

The current UK headline corporation tax rate is 20 percent, but, as announced in the recent Budget, the tax will be reduced to 17 percent by 2020. In the first year of its operation, the new group has forecasted an adjusted effective tax rate at "low to mid 20 percent."

TAGS: tax | business | mergers and acquisitions (M&A) | corporation tax | United Kingdom | corporate headquarters | multinationals | transfer pricing | tax rates | United States | tax breaks | services | Tax

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