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Pharma Giants Shift Billions in Taxes Offshore
21 Mar
Summary
- Ten major US drugmakers reduced taxes by $5 billion offshore.
- Some companies paid more taxes to foreign governments than the US.
- New rules mandate disclosure of offshore tax payments.
Ten major US pharmaceutical and biotech companies have significantly reduced their federal tax obligations, collectively saving at least $5 billion by shifting income to low-tax foreign jurisdictions. This practice is revealed through new mandatory disclosures in annual corporate reports, which companies had previously sought to keep private.
These disclosures highlight that several drugmakers paid more in income taxes to overseas governments than to the United States in the past year. For instance, Eli Lilly reported paying $6.6 billion in taxes in Ireland, double its US tax payment. Similarly, Merck paid $2.1 billion in Switzerland, exceeding its US tax contributions.
New accounting rules now require listed US companies to detail their tax payments in countries where they have the largest tax bills. This transparency aims to address long-standing debates about multinational corporations paying their fair share. Previously unavailable insights into these companies' overseas operations are now accessible to investors, potentially influencing future tax policies and corporate behavior.
