Forest Laboratories, a US pharmaceutical firm, has channelled more than $2 billion in revenues through its Irish operation, making pre-tax profits of almost $810 million.
The company paid corporation tax of just $22.3 million, the equivalent of 2.75 per cent. Forest Laboratories Holdings, an Irish-incorporated subsidiary of the New York listed company, sub-licenses the rights to manufacture drugs to other Forest subsidiaries.
Revenues at the Irish firm rose by $500million to $2.1 billion in the 12months to the end of March, and pre-tax profits rose by $174 million to $809.4 million.
At the end of March, the company had accumulated profits of more than $2.4 billion. At the Irish corporation tax rate of 12.5 per cent, Forest would have been liable for more than $101 million in corporation tax for the financial year.However, its accounts show a deduction of $76 million for ‘‘income not subject to Irish tax’’ and other reductions, including a $4.7 million adjustment for manufacturing relief.
Forest Laboratories has acknowledged using Ireland to reduce its tax bill. In its annual report, filed with the US Securities & Exchange Commission, the firm said its overall tax rate for the year was 20 per cent, compared with the US rate of 35 per cent.‘‘A portion of our earnings is taxed at more favourable rates applicable to the activities undertaken by our subsidiaries based or incorporated in the Republic of Ireland,” it said.
However, the company said its transfer pricing between intergroup companies ‘‘is the subject of an ongoing audit by the Internal Revenue Service’’ in the US.
‘‘Changes in tax laws or in their application or interpretation, such as to the transfer pricing between Forest’s non-US operations and the US, could increase our effective tax rate and negatively affect our results of operations,” it said.
1 comment:
Drug companies use both Ireland and Puerto Rico to reduce thier tax bills in the same way.
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