Ireland's corporation tax regime could be a key factor in whether the proposed merger between Allergan and Pfizer happens.

It has been confirmed that they are in talks to create the world's largest pharmaceutical firm - if they do join forces the pair will hope to benefit from Ireland's 12.5% corporation tax rate.

Allergan is based in Dublin, a merger could allow Pfizer to shift its tax residency to Ireland - meaning that it would pay the low Irish tax rate, instead of the 35% that it is currently paying in the US.

A person familiar with the negotiations has told Reuters that the issue of tax inversion is being discussed as part of the talks.

Hillary Clinton’s camp has been out quickly in response to the proposed deal, “[we are] committed to cracking down on so-called tax inversions where a company chooses to leave the US on paper to game the tax system,” a spokesman for her campaign said

New York Democratic Senator, Charles Schumer said the continued pursuit of inversions showed there was a lot more work to be done to stop corporations organising their global operations to reduce their tax bills.

Billionaire activist investor Carl Icahn, a key-backer of the Donald Trump campaign and of tax reform, said the deal would result in the loss of the country’s 10th largest company to Ireland.

Allergan’s share price rose by 7% yesterday to $304 indicating that Pfizer may have to pay more than €150bn to secure it, which may prove to be too pricey - despite the benefits it would bring.

Pfizer employs about 4,000 people in eight plants across Ireland manufacturing a range of cardiovascular drugs, vaccines, animal health products and Viagra, while Allergan employs close to 1,000 people in Westport principally in R&D and the production of Botox.