Following an exposé of alleged “rampant off-shoring” of profits by tech-companies including Apple, Microsoft and Google, Australia’s Economics References Committee met last week to discuss widening the focus of its Senate Tax Avoidance Inquiry to include “big pharma”.
The Senate Tax Avoidance Inquiry was referred to the Economics References Committee by Senate on October 2, 2014 to examine corporate tax avoidance in Australia.
According to Fairfax Media, Tax Commissioner, Chris Jordan, suggested Senators turn their attention to the multinational pharmaceutical companies, citing the sector displayed similar “attributes of the tech industry” in the way their Australian arms transfer large sums of money to subsidiaries in tax havens world-wide.
Meanwhile, the pharmaceutical industry’s peak body, Medicines Australia, stated “It was preparing a submission for the Committee on behalf of its members, whom it described as ‘great employers who invest a lot in research and development’.”
The initiative follows a similar US inquiry that saw pharmaceutical companies attempting to downsize their tax bills, while company tax bills for pharmaceutical companies based in Australia were called into scrutiny through media reports.
Earlier this month, Fairfax media reported pharmaceutical giant, Pfizer paid only $1.5 million in Australian company tax last year, despite receiving $739 million from the government for filling 16.4 million subsidised scripts in 2014, while reporting local operating cash flows of $1.4 billion for 2014.
Pfizer is not the only company to come under scrutiny, with Astrazeneca and Abbvie called into question due to their merger plans, which would see the merged companies headquartered in the UK, and subsequently accessing a lower tax rate than in the US.
The Tax Commissioner, Chris Jordan, reportedly informed the Senate inquiry that the “ATO is currently involved in an international collaboration on the tax affairs of big pharma”.
Fairfax reports Medicines Australia has recruited James Boyce, former media adviser to the Prime Minister, The Hon. Tony Abbott MP, to spearhead its government relations efforts.
Watch this space for further updates.