AbbVie’s mammoth $53 billion acquisition of Dublin-headquartered Shire is, by any metric, the largest tax inversion deal in US financial history.

By taking up residence abroad – the merged entity will be tax resident in the UK – the US pharma giant will reduce its effective tax rate from about 22 per cent to 13 per cent.

AbbVie is the latest in a long line of big US firms to use a foreign acquisition to put its offshore cash beyond the reach of the US taxman.

The move is likely to heighten tensions between Washington and Europe on the deli cate issue of tax avoidance.

Central Statistics Office figures yesterday indicated nearly 45 per cent of Irish product sales in 2013 – equating to a whopping €40 billion – came from the pharmaceutical and chemical sectors here.

The lion’s share – €29 billion – was made up of sales of pharmaceutical products and preparations, which increased by 7.2 per cent year on year.

The question arises just how much of this €40 billion product load is actually manufactured here and how much is just passing through to take advantage of our friendly tax rates.

The figures are part of the CSO’s 2013 Prodcom survey, the EU’s standard classification of production statistics.

Many companies surveyed do not specify whether their product is manufactured in Ireland or merely sold through an Irish operation, making it impossible to calculate how much of the €40 billion is based on local economic activity.

Given that €40 billion represents about 25 per cent of Irish GDP and the pharma sector, according to our national accounts, contributes to about 10 per cent of the economy, the figure is undoubtedly overstating what is actually going on here.

Last year’s jump in pharma product sales also appears to have coincided with a noticeable contraction in production in the pharma sector, detailed in previous production stats from the CSO, and a collapse in profits linked to the patent cliff.

This may be explained, however, by the fact that one set of figures relates to production while the other measures sales, which may lag the former.

Davy chief economist Conall Mac Coille says Ireland’s “national accounts are simply getting more and more difficult to interpret” because of distorting revenue flows and complicated tax arrangements in the multinational sector.