Tax avoidance of four pharmaceutical giants more than €3.5 billion
Tuesday, 18 September 2018
The four largest pharmaceutical companies in the world are thought to have avoided €3.5 billion in tax, on an international scale, between 2013 and 2015. A new report published by Oxfam on Tuesday indicates the details of these activities.
In the briefing paper, entitled “Prescription for Poverty: Drug companies as tax dodgers, price gougers and influence peddlers”, the NGO analyses the practices of Johnson & Johnson, Pfizer and Abbott and Merck, based upon their available financial data. These four multinationals spearheaded global brands, such as Imodium, Xanax and Nesivine.
Oxfam stresses that whilst the companies are thought to have produced profit margins of around 5% in developing countries between 2013 and 2015, and some 7% in the majority of developed countries, the four companies record a significantly higher profit margin – 31% – within tax havens such as the Netherlands, Ireland and Singapore.
The NGO confirms that the disparity of these figures “indicates that the pharmaceutical giants are making large-scale transfers of their profits to tax havens.” Oxfam estimates suggest that nine rich countries and seven developing countries are thought combined to have thereby lost up to €3.5 billion in taxes. The US is far from being one of the major losers, but the NGO suggests that countries such as France, Germany, Italy, India and Colombia may well have suffered losses of tens of millions of euro.
According to the report, tax havens such as Ireland, the Netherlands and Singapore are thought to play a key role in tax avoidance. Moreover, multinationals enjoy numerous tax advantages in other countries. For example, in Belgium, such companies can deduct notional interest.
Maaike Vanmeerhaeghe, the Policy and Advocacy Officer on ‘Inequality and Tax’ with Oxfam, stresses, “The very large pharmaceutical companies appear to undertake large-scale tax avoidance, and place pressure on governments to obtain even more tax advantages.”
She goes on, “Belgium has reformed some of its tax advantages, but thanks to others such as the deduction for innovation income, the pharmaceutical giants can further reduce their tax bill by a considerable amount.”
Moreover, Oxfam’s report criticizes the excessive influence of the pharmaceutical sector. In Brussels, the sector speaks of spending nearly €40 million per year to influence the European decision-making process, the comparative amount of which is $200 million per year in the US. The NGO concludes that lobbying to influence policies in the sphere is also a significant activity in Belgium and developing countries.