GSK Named As One Of 6 Big British Firms Who Avoided UK Corporation Tax In 2014


How does GSK get away with paying such low rates of corporation tax in the UK (or in some years such as 2014 -none at all)- despite claiming to be a UK company and despite the vast profits GSK generates globally?…
 
See the Guardian article  (from 2009) under this latest one for more…

http://www.independent.co.uk/news/uk/six-british-multinationals-including-shell-vodafone-lloyds-banking-group-did-not-paid-any-a6844676.html

Six British multinationals ‘did not pay any UK corporation tax in 2014’

The same year, the six companies in the top 10 of the London stock exchange made a combined global profit of 30bn. 

Six of Britain’s 10 biggest multinationals, including Shell, British American Tobacco (BAT) and Lloyds Banking Group, paid no UK corporation tax in 2014, an investigation has claimed.

The reports come after Chancellor George Osborne received a backlash over calling a “sweetheart deal” with tech giant Google, which was allowed to pay £130m for back taxes over the last decade, a “success”.

Lloyds, brewer SABMiller and drugs company AstraZeneca were also among the six multinationals not to have paid any coropration tax in 2014, reports the Sunday Times.

The same year, the six British companies made a combined global profit of £30bn.

British Petroleum (BP) and drugs company Glaxo Smith Kline (GSK) refused to reveal how much UK corporation tax they paid, but GSK declared it had paid some tax in 2014. 

 

 

 



The title to more than 40 GlaxoSmithKline trademarks went to a factory in Puerto Rico, including the trademark for the top-selling diabetes drug Avandia.

The trademark for the newly launched breast cancer drug Tykerb was assigned to Ireland, another low-tax regime, in 2005, followed there by the firm’s Sensodyne toothpaste brand in January 2008.

In 2007, the Puerto Rico trademarks, including Avandia, were shifted on to the firm’s Irish operation in Cork. Glaxo’s production was phased out at SB Pharmco Inc in Puerto Rico after quality control problems.

The value of Glaxo’s trademarks, their intellectual property, has been estimated to constitute as much as 5% of the eventual selling price of a drug. The company explains in its most recent annual report: “Profits arising from certain operations in … Puerto Rico and Ireland are accorded special status and are taxed at reduced rates compared with the normal rates of tax in these territories. The effect increased earnings per share by 4.9p in 2007, 7.2p in 2006 and 2.7p in 2005.”

Helen Jones, Glaxo’s head of tax, told us: “It is a widespread and totally accepted practice for global companies to license out intellectual property in return for royalties which reflect the value of work carried out by the holder.”

Glaxo pays on average more than 80% of its tax to overseas countries rather than to Britain. Last year as a result, although the British official tax rate has been 30%, and Glaxo’s worldwide profits were £7.4bn, the company’s actual UK tax bill was only £450m. This is still a hefty sum, and it is to Glaxo’s credit that it declares its UK tax charge (although it still does not disclose how much UK tax is actually paid over in cash each year). But it is only a tiny fraction of the pharmaceutical giant’s profits particularly relevant to the amount of Glaxo’s initial research and development carried out by British scientists in Britain.

Glaxo says it is natural that most of its tax is paid overseas, where it has more than 80% of its 100,000 employees. The company claims more than 90% of its turnover is “not related to the company’s UK subsidiaries”. It is not clear how much more UK tax would be paid if the intellectual property created in the UK had been kept in the UK.

Glaxo has been embroiled in tax rows around the world, not only in the UK, but in Canada, Japan, and most of all the US, where it makes the most lucrative sales. In 2006, it finally agreed to pay the US £1.7bn to settle a huge dispute over sales of the ulcer drug Zantac and others produced in the Puerto Rico factories. The US claimed it was being cheated out of its fair share of global tax.

Transnational companies do sometimes find themselves caught in the middle of arguments between different countries about their respective share of the tax cake.

The US is also currently demanding another $680m, which Glaxo disputes, over attempts to deduct loan interest from Glaxo profits. The company was locked in a lengthy fight with the British tax authorities, described as being over “transfer pricing” and “controlled foreign company” issues, in which Glaxo was accused of piling up too many profits abroad.

Glaxo said last year that there were “wide differences in positions” between the company and HM Revenue & Customs, which might lead to litigation. But in June, the disputes were suddenly resolved “with no material impact on the expected tax rate for the year”.

This followed shortly after meetings between Glaxo executives and Gordon Brown, and public threats that Glaxo might relocate to the Republic of Ireland.

In 2006, Glaxo paid US £1.7bn to settle dispute over sale of drugs produced in Puerto Rico

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2 comments

  1. kiwi

    Lets remember that this is a company that cares nothing for the lives of children, teenagers and adults.
    Its no surprise they wouldnt give a rats arse about tax obligations.
    Being honest just isnt part of their CV.

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