It had been widely expected in the financial services sector that the pharmaceutical big hitter would make the move following its full acquisition of Alliance Boots.

According to sources, though the move from the US would allow Walgreen's to pay lower tax rates, proposals being considered in Washington suggest it would be problematic.

This week saw the US announce plans to prevent foreign tax centres from being created.

The firm undertook what has been called 'extensive analysis'. CEO and president of Walgreen's, Greg Wasson, said that an independent committee subsequently advised that there was no way of reaching a 'tax inversion' structure which would satisfy the Internal Revenue Service.

Mr Wasson went on to explain:

"The company also was mindful of the ongoing public reaction to a potential inversion and Walgreen's unique role as an iconic American consumer retail company with a major portion of its revenues derived from government-funded reimbursement programs,"

However, there is a body of shareholders urging the firm to shift its domicile tax base, with Goldman Sachs among them.

Walgreen’s decision has also ramped up the pressure on other firms in the US considering a move.

Another pharmaceutical firm, Abbvie, is lining up a takeover for Shire, with plans been drawn up to relocate its headquarters to the UK.