The United States' government has unveiled new measures to curb corporate "inversion" deals involving US firms. 

Shares in one of Ireland's largest pharmaceutical firms have plummeted. Dublin-based Allergan is expected to merge with Pfizer, this would see its tax affairs move to Ireland.

Inversion deals occur when companies with significant operations in the US, merge their operations with companies in countries with lower taxes, such as Ireland, in order to cut their tax bills.

Under previously-announced US Treasury rules, for inversion to take place, both companies require to have significant and proportionate US business assets.

Allergan shares drop, via MarketWatch

The latest Treasury moves will impose a three-year limit on overseas companies bulking up on US assets to avoid ownership limits for a subsequent inversion deal. This may mean that Allergan’s key deals over the past 36 months won’t be included to get the company to the required inversion threshold.

Allergan has been involved in mergers and acquisitions to the value of about €66bn over this period.

Shares in Allergan fell 22% in after-market trading while the stock of New York-based Pfizer rose by 3%.

"We know companies will continue to seek new and creative ways to relocate their tax residence to avoid paying taxes here at home," said Jack Lew, US treasury secretary.

He added that the new regulations hope to "further rein in inversions and reduce the ability of companies to avoid taxes through earnings stripping."

Some of the new rules focus on 'serial inverters' who have gone through multiple takeovers.

A spokeswoman for Pfizer told The Wall Street Journal that the company is reviewing the new rules and whether they will impact on its merger plans.