In the case of Allergan and Pfizer, there are two sovereign powers in play – Ireland and the United States. Why was Ireland interested in letting the inversion take place, and why was the U. S. government against the inversion? Is the decision by the United States a direct affront to the sovereignty of Ireland?

Explanation:

The case of Allergan and Pfizer would have been the most momentous merger case in the U.S's history if it had occurred. With Pfizer and Allergan all set to merge into one big corporate, the U.S Treasury Department managed to cancel the merger.

With the aim to inverse tax, the Allergan and Pfizer wanted to shift the headquarter from U.S to Ireland once they merge into one big corporate. Ireland had substantially lower corporate tax rate and this prompt Pfizer-Allergan to establish there.

However, the deal was struck off after the Treasury Department issued numbers of corporate tax inversion laws. On the other hand, Ireland was  interested in letting the Allergan and Pfizer inversion take place because it would have boosted the Irish economy greatly. These two companies were world's largest pharmaceutical companies and would have generated Ireland's corporate tax revenues by many folds.

The decision by the United States was not a direct affront to the sovereignty of Ireland as Pfizer is allegedly a U.S based company for over a century. It only put restrictions on Allergan by implementing a new regulation called "serial inverters."