[Ip-health] Big pharma’s paltry tax bill revealed
D.Legge at latrobe.edu.au
Tue Jun 2 15:48:27 PDT 2015
Big pharma’s paltry tax bill revealed
The Age, Melbourne, 3 June 2015, Page 10
Drugs Tax Office audits multinationals
The five biggest suppliers of publicly subsidised medicines in Australia recorded sales of nearly $5 billion last year but paid an average of just $10 million each in company tax.
Research by the Parliamentary Library, obtained by Fairfax Media, has disclosed the tax contribution of multinational pharmaceutical companies, including Pfizer and AstraZeneca, makers of common cholesterol drugs Lipitor and Crestor, respectively.
The report emerged as the Senate committee which recently grilled tech multinationals Apple, Google and Microsoft resolved to call pharmaceutical companies and their industry representatives to public hearings of the tax avoidance inquiry on July 1.
The committee’s move on ‘‘big pharma’’ came after Australian Tax Commissioner Chris Jordan told a Senate estimates hearing on Tuesday that at least four large drug makers are being audited by the Tax Office.
‘‘Clearly there are [ATO] investigations happening in that industry,’’ he said.
The hearing heard that multinational pharmaceutical companies on average report higher profits in their overseas divisions through a combination of ‘‘transfer pricing’’ – where a company charges itself higher prices for imported products to reduce tax exposure in Australia – and royalty payments for intellectual property owned in jurisdictions with much lower tax rates.
The library investigation, requested by the Senate committee, found Pfizer and Sanofi-Aventis both reported losses in Australia in 2014. Those companies received a combined $1.1 billion from the taxpayer for supplying medicines through the Pharmaceutical Benefits Scheme.
In total, the top five pharmaceutical suppliers to the PBS received $2.8 billion in public money. Their total Australian sales were $4.8 billion. But the research found their combined profits were a slim $50 million. They paid $53 million in tax between them – or about 1¢ in tax for every dollar earned in Australia.
Sanofi-Aventis, which had sales of $883 million, received a tax credit from the ATO of $8.7 million.
In 2013, the same companies paid just $47.5 million in tax. Medicines Australia, the Canberrabased peak body of pharmaceutical companies, said it could not comment on individual tax affairs but said its members were big investors in research and development and big employers.
Fairfax Media revealed last month that Pfizer, the No. 1 supplier to the PBS, has 128 entities registered in tax havens, US-based Citizens for Tax Justice says.
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