The U.S. government probably can’t take regulatory action to stop companies from lowering tax bills through deals that put their legal addresses outside the country, John Koskinen, commissioner of the Internal Revenue Service, said Wednesday.

Pfizer Inc. this week proposed the biggest such deal yet, a $98.7 billion takeover of AstraZeneca Plc that would move the largest U.S. drugmaker to the U.K. for tax purposes and lower its tax rate.

“We’ve done, I think, probably all we can within the statute,” Koskinen, 74, told reporters in Washington Wednesday, saying the trend of corporate moves point up the need to revise the U.S. tax code. “We try to make sure people are within the bounds, but if they’re within the bounds, if they play according to the rules, then they have a right to do that.”

Koskinen’s remarks show the limits of the government’s ability to respond without Congress and suggest that the Obama administration won’t make a regulatory move to stop or limit so- called corporate inversions.

Pfizer would join at least 19 other companies making or contemplating similar transactions, including Chiquita Brands International Inc. and Omnicom Group Inc., the largest U.S. advertising firm.

Cracking down on deals in which U.S. companies move their legal address outside the country to pay lower taxes is a priority for the Obama administration, a Treasury Department official said earlier Wednesday.

Broader Revision

The official, who sought anonymity to discuss the administration’s plans, said the transactions emphasize the need for a revision of the U.S. tax code to reduce tax rates. Earlier this year, the administration proposed making the deals, known as inversions, harder to accomplish.

The broader tax plan and the narrower limits on inversion deals haven’t advanced in Congress. The Treasury Department hasn’t said whether it would curtail the deals with new regulations that it could advance without Congress.

U.S. lawmakers have responded to the string of deals by talking about the importance of broader changes to the U.S. tax code, which are months if not years away.

“The last few weeks have presented a textbook for why tax reform is so important,” Senator Ron Wyden, an Oregon Democrat and chairman of the tax-writing Finance Committee, told reporters Tuesday. “The fact that the headlines are being dominated by how you can game the American tax code with these overseas deals ought to be the wake-up to anybody.”

Accelerating Deals

The prospect of Treasury regulations or legislation could encourage companies to accelerate deals.

These deals have become attractive in part because of the increasing disparity in countries’ marginal corporate income tax rates, which are typically higher than what companies actually pay.

Ireland, which will be the new home address for Charlotte, North Carolina-based Chiquita, the banana distributor, has a 12.5 percent rate. The U.K.’s rate is 21 percent and will decline to 20 percent next year, with no tax on active businesses outside the country.

In contrast, the top U.S. corporate rate is 35 percent. Companies also must pay U.S. taxes when they repatriate foreign profits, after receiving credits for foreign taxes.

The spate of inversion deals mirrors what happened in 2001 and 2002, when companies including Ingersoll-Rand Plc and Cooper Industries Plc moved abroad.

Effective Moratorium

Then, Congress effectively imposed a moratorium as the top members of the Senate Finance Committee announced plans to advance legislation and said any bill would be retroactive to that date.

Two years later, the ensuing law prevented companies from receiving the tax benefit of an overseas merger if their existing shareholders still owned 80 percent or more of the company’s stock after the deal.

In his budget plan released this year, President Barack Obama proposed lowering the 80 percent threshold to 50 percent. That plan would raise $17 billion for the U.S. Treasury over the next decade.