 |
 |
Glaxo hit by £2.7bn US tax bill Steve Hawkes, Evening Standard 7 January 2004 DRUGS giant GlaxoSmithKline has been landed with one of the biggest tax claims of all time after receiving a bill for more than $5bn (£2.7bn) from the US government. Glaxo slammed the US Internal Revenue Service for 'inconsistency' and vowed to take its long-running dispute with the authority to a US Tax Court. The dispute centres on the allocation of taxes the IRS claims Glaxo made on profits from 'heritage' products sold between 1989 and 1996, before the merger with SmithKlineBeecham. Glaxo revealed the IRS had served 'a statutory notice of deficiency' for $2.7bn tax and estimates interest on the full claim alone runs to $2.5bn. Shares in the group eased 8p to 1252p despite Glaxo's insistence it had no case to answer and that it believed it had made adequate provisions for any claim. It also faces a bill for the period 1997-2000. A Glaxo spokesman said: 'We believe we paid more than sufficient taxes during the period in question, we don't agree with the tax claim and we are planning to contest it in a US tax court.' He added that there were 'wide differences' between the size of the IRS tax claim and the amount the group felt it was liable for. Insiders at Glaxo, which is led by chief executive Jean-Pierre Garnier, are also furious as they feel they have been treated differently by the IRS to many major rivals, including SmithKlineBeecham before the merger. The claim comes just a day after US regulators said they needed more information before they could approve the new use of Glaxo's ReQuip drug for Parkinson's disease in treating restless leg syndrome. Glaxo argues it has already paid the IRS $1.3bn in taxes for 1989-1996. It adds the UK Government has already backed its position that no more taxes are due. Two of Glaxo's biggest sellers at the time were anti-ulcer drug Zantac and Imitrex, a treatment for acute migraine attacks. More than half its global revenue comes from the US. Tax experts said such arguments over where profits fall around the world were only likely to increase as companies become more global and tax authorities more adept at chasing money. Loughlin Hickey, head of tax at KPMG, said: 'These disputes naturally occur and will continue to do so. There has been a profit but it's a case of salami-slicing that profit to find out where it falls.' Overseas earnings targeted GLAXO'S tax dispute with the US Internal Revenue Service again highlights transfer-pricing issues featured in Gordon Brown's Pre-Budget Report last month. Increasingly, companies with overseas units are facing claims from tax authorities looking for a slice of revenue from profits they argue a firm has made in their country. European Union transfer pricing rules are designed to clamp down on the movement of profits into loss-making arms to reduce tax bills. In his speech, the Chancellor brought Britain into line with the EU by insisting companies adhere to transfer pricing rules for inter-business transactions in the UK. SOURCE: This is Money, UK http://www.thisismoney.com/20040107/nm72637.html * * * ---------------------------------------------------------------------- To sign-off Parkinsn send a message to: mailto:[log in to unmask] In the body of the message put: signoff parkinsn