Chiquita says move to Ireland isn’t about taxes
Central to the acquisition is a Dublin-based vehicle — currently known as Twombly One Ltd. — that will buy out the shareholders of both Chiquita and Fyffes. Eventually, Twombly One will be renamed ChiquitaFyffes PLC and own the two companies, both of which trace their origins to 19th-century sailors.
Chiquita has stressed its decision wasn’t driven by taxes because its U.S. operations — based in North Carolina — will continue to be taxed by Uncle Sam. The cash it holds overseas is expected to continue to be subject to U.S. taxes should the company bring any back to the U.S.
Just pulling Fyffes into Chiquita could have made the Irish company’s earnings subject to U.S. tax. Now that part of the new company — which brought in roughly the equivalent of $1.5 billion in revenue last year compared with $3 billion for Chiquita — will be able to grow under the umbrella of Ireland’s lower corporate-tax rate, 12.5% versus 35% in the U.S.
The move could also help the combined company with its tax planning in the years ahead. “It is greatly improbable that they have chosen Ireland as its domicile because of its superior banana-growing climate,” said Edward Kleinbard, a law professor at the University of Southern California and a former chief of staff for Congress’s Joint Committee on Taxation. “There may not be any immediate U.S. tax consequences, that is true, but it positions the combined company to shift future income growth outside the U.S. tax net.”
Source: wsj.com