GSK settles $3.1bn tax bill

12-09-2006

Pharmaceutical giant GlaxoSmithKline (GSK) has agreed to pay a record $3.1 billion (£1.7 billion) to settle a long-term dispute with tax authorities in the United States.

The settlement, the largest in the history of the US Internal Revenue Service (IRS), ends a dispute between the US government and British-based firm GSK over transfer pricing – the price set for goods and services transferred between parts of the same company in different companies.

The dispute over how much tax GSK's US subsidiary should pay to the IRS dated back to 1989 and covered profits made on various products made by the company, including its gastro-intestinal drug Zantac.

The case had been due to go to court in February next year, but GSK announced yesterday that it had agreed to settle the dispute in order to end uncertainty over future litigation.

In a statement, the company said: "GSK was confident of the strength of its position, but in view of the size of the potential financial exposure, as well as the continued level of resource being applied to the case, GSK concluded that it was in the best interests of its shareholders to reach this settlement, thereby removing the costs and uncertainty of future litigation."

Europe's largest drugs manufacturer said that it had previously made provision to end the tax dispute and stressed that its settlement with the IRS would "not have any significant impact on the company's reported earnings or tax rate".

As part of the settlement, GSK was forced to abandon its claim for a $1.8bn (£9.6 million) tax rebate from the IRS.

GSK stocks responded positively to news of the settlement yesterday, with the company's share price rising ten pence to £14.79.


Bookmark with:
Bookmark with: Digg Digg Bookmark with: Del.icio.us Delicious Bookmark with: Reddit Reddit Bookmark with: StumbleUpon StumbleUpon Bookmark with: Google Google Bookmark with: Technorati Technorati Bookmark with: Netvouz Netvouz

Latest News:

Search News
News Front Page
Accountancy / Tax
Advertising / PR
Armed Forces
Automotive
Aviation / Aerospace
Banking / Finance
Charities / Voluntary
Childcare / Youth
Construction / Property
Customer Services
Education / Training / Teaching
Emergency Services
Engineering / Electronics
Entertainment / TV / Theatre
Graduate Roles
Health / Beauty
Hotel / Catering / Restaurants
HR / Recruitment
Insurance / Pensions
International / Overseas
IT / Internet
Legal
Management / Business
Manufacturing / Industry
Media / New Media / Creative
Medical / Healthcare
Pharmaceutical Industry
Public Sector
Retail / Wholesale
Sales / Purchasing / Marketing
Science / Technology
Secretarial / PA / Admin
Skilled / Semi-skilled Manual
Telecommunications
Transport / Logistics
Travel / Tourism / Leisure