Talks of a mega-merger between Pfizer (PFE) and AstraZeneca (AZN) have been swirling around Wall Street since April. While the $176 billion Pfizer has reportedly been in talks with the UK-based AstraZeneca for about nine months, recent shakeups in tax law are causing big changes to the entire healthcare M&A scene.

AbbVie and Shire: The Beginning of the End

The prospective merger between AbbVie (ABBV) and Ireland-based Shire (SHPG) fell apart last week, even though Wall Street had long assumed the acquisition was a foregone conclusion. As I noted last Wednesday,

“It looked like the $54 billion acquisition of SHPG by ABBV was a done deal until recently, as the U.S. Treasury put so-called tax-inversion deals in its sights and passed rules against them. Then today, AbbVie announced it was reconsidering the deal — bad luck for SHPG shareholders.”

In an effort to boost tax revenue, the U.S. government is cracking down on “tax-inversion” deals that allow domestic companies to use overseas money to acquire a foreign entity for the sake of tax purposes. Countless companies employ the strategy, which is designed to avoid repatriation fees and the higher U.S. corporate tax rate.

Sources close to the PFE-AZN talks are saying that Pfizer is strongly reconsidering its interest in AstraZeneca in light of the U.S. Treasury department’s tougher stance. This is unfortunate for both companies, but could be especially harmful to AZN stock, since Pfizer was likely going to pay a premium for shares. With AZN stock sitting at a P/E near 42, it certainly seems like AstraZeneca shareholders are expecting some sort of acquisition.

While AZN stock is still up a tidy 14% in 2014, since the U.S. Treasury’s tax-inversion announcement nearly a month ago, shares are off by nearly 10%.

Pfizer, AstraZeneca, Abbvie, and Shire aren’t the only companies dealing with changing foreign tax issues. Outside of healthcare, tech giants like Google (GOOG) and Apple (AAPL) are also facing scrutiny — by domestic and foreign governments alike — for their tax practices. GOOG is currently wrangling with French officials over its tax structure in that country, as much of the search giant’s revenues are routed through Ireland. The European Union is going after AAPL on similar grounds.

It may be years before we understand what consequences these changing tax laws have on corporate America. But in the short-term, they’re certainly changing the outlook for PFE and AZN stock.

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As of this writing John Divine held no positions in any of the stocks mentioned. You can follow him on Twitter at @divinebizkid.