Healthy Skepticism Library item: 15041
Warning: This library includes all items relevant to health product marketing that we are aware of regardless of quality. Often we do not agree with all or part of the contents.
Publication type: news
AstraZeneca
The Guardian 2009 Feb 3
http://www.guardian.co.uk/business/2009/feb/03/1
Full text:
The rights to the top-selling AstraZeneca drugs placed in a tax haven in Puerto Rico include those for Zomig, used to treat migraines, and the anti-cholesterol drug Crestor. They were registered in 1996 and 1999 respectively.
In November 2000, the group also assigned its trademark rights in Faslodex, a breast cancer drug, to IPR Pharmaceuticals Inc in the Caribbean territory. IPR is owned by AstraZeneca. AstraZeneca has been embroiled in worldwide disputes about “transfer pricing” according to its own annual report.
It made a settlement of up to $100m (£70m) with UK and US authorities in 2004, and it still faces “tax audits” around the world. It has put aside a precautionary $1.3bn in its accounts as a result.
The company has been hinting that its next step to cut its taxes may be to move out of the UK to the Irish Republic.
It has refused to reveal since 2004 how much UK corporation tax it pays. But in 2004 it only paid the exchequer £103m out of its £2.6bn profits.
The company says it makes more than 70% of its profits overseas, and pays the necessary taxes abroad.
The US arm of AstraZeneca was named in 2004 as one of the 30 companies involved in a large avoidance scheme sold by the US arm of the international accountants KPMG.
It was estimated to have cost the US tax authorities, who called it “abusive”, almost £1bn.
The scheme, called CLAS – Contested Liability Acceleration Strategy – was described as “aggressive” and “risky” by KPMG itself, according to leaked internal documents.
It was marketed as a scheme suitable for firms such as pharmaceutical companies, which often have outstanding lawsuits over the safety or efficacy of their products.
AstraZeneca in the US claimed huge tax losses, by setting up a trust allegedly to fund potential damages payouts in their long-running lawsuits. The payments into the trust were in effect merely intra-company IOUs.
The company said that it had subsequently settled the matter with the US Internal Revenue Service “without penalty”.
Since then, AstraZeneca claims to have mended its ways.
It says in its current annual report: “We draw a distinction between tax planning using artificial structures and optimising tax treatment of business transactions, and we only engage in the latter.”
AstraZeneca faces ‘tax audits’ around the world. It has put aside $1.3bn
