For years, a sky-high corporate tax rate encouraged American companies to invert, which in turn shifted headquarters and jobs overseas.

Almost two years since the Tax Cuts and Jobs Act cut corporate taxes to a globally competitive rate, the same companies who planned to invert are singing a different tune.

But don’t take it from us. Read the latest from the Wall Street Journal.

WSJ: Inversion Reversions Arrive as Companies Get Smaller Tax Edge From Foreign Addresses

Inversions are starting to revert.

When Mylan moved its corporate address to the Netherlands in 2015, the pharmaceutical company joined a wave of corporate inversion deals aided by tax advantages of a non-U.S. address. Now, Mylan’s address is coming back to the U.S. through a merger deal this week with part of Pfizer Inc., a sign that the 2017 tax law is rendering these moves less attractive than they once were.

The deal comes a month after Allergan Plc—another inverted pharmaceutical company based in Dublin—announced its return to a U.S. parent through a sale to AbbVie Inc.

On balance, say tax lawyers and analysts, foreign addresses still confer a slight tax advantage.

But after the U.S. corporate tax cuts in the 2017 law, the edge is small enough that it may not be worth reputational and political costs.

Those changes may deter new inversions and cause inverted companies to retake U.S. addresses if other business reasons warrant such a move. Inversion deals were particularly hot from 2012 to 2015, as companies such as Eaton Plc and Medtronic Plc took foreign addresses.


“Transactions that historically would have been structured as inversions are no longer being structured that way, even when the opportunity to do it is clearly there,” said Robert Willens, a New York tax analyst. “Before, there was such a clear economic advantage to structuring as an inversion that you were willing to withstand the negative aspects.”

Earlier this decade, companies had strong incentives to take non-U.S. addresses. U.S. companies owed the full 35% tax rate on their world-wide income, though they got credits for foreign taxes and deferred the U.S. layer until they repatriated money.

Obama administration regulations curbed some benefits. Then, the 2017 law cut the U.S. corporate tax rate to 21% from 35%, reducing incentives for profit shifting and using foreign-parented companies.

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