US pharmaceutical giant, Pfizer, has scrapped its $160 billion deal to buy Irish drugs firms Allergan after the US authorities announced changes to corporate tax laws.

It comes just two days after the US Treasury announced a crackdown on US companies merging with companies in countries with lower tax rates, known as "inversion" deals.

The incredible $160bn takeover of Allergan, which has been in the pipeline for several months, would have been the single largest inversion in history.

Pfizer is expected to have to pay Allergan around $400 million as compensation for terminating the deal.

The deal would've seen Pfizer move its headquarters to Dublin. At 12.5%, Ireland's corporate tax rate is considerably lower than that of the United States, where Pfizer currently pays 35%. The deal would have been perfectly legal, "but that's exactly the problem" President Barack Obama warned in a speech on the Treasury's changes.

"These companies get all the rewards of being an American company without fulfilling their responsibility to pay their fair share of taxes," President Obama added, before describing inversions as "insidious loopholes".

It's not the first time Pfizer has tried to buy a foreign company in this part of the world. In 2014, it submitted multiple bids for British pharmaceutical firm Astra Zeneca, which were rejected because they 'undervalued the business'. Market experts have suggested that Pfizer needs to buy companies in order to grow its own business, but cynics highlighted its attempted takeover of Astra Zeneca as a means to reduce its tax bill.