This United States Senate investigation accuses Pfizer of strategically shifting profits offshore in 2019, effectively allowing the company to report zero taxable U.S. income despite earning approximately $20 billion in U.S. sales that year. The report further alleges that this practice was not an isolated incident, as Pfizer additionally reported no taxable U.S. income in 2018 or 2020. Other pharmaceutical companies, including Amgen, AbbVie, Bristol Myers Squibb, and Merck, have also been implicated in similar tax avoidance strategies.
According to the investigation, Pfizer used an accounting technique known as “round-tripping,” where it classified U.S. sales as foreign income to take advantage of a lower tax rate introduced under the country’s 2017 Tax Cuts and Jobs Act. This law reduced the corporate tax rate from 35 percent to 21 percent while allowing foreign subsidiaries of U.S. companies to pay an even lower rate of 10.5 percent.
The report also accuses Pfizer of making undisclosed tax agreements with countries such as Singapore and Puerto Rico, thus further complicating efforts to track its financial activities. Lawmakers argue that such tax strategies allow large pharmaceutical companies to shift billions in profits overseas while paying less in U.S. taxes than many working Americans.
To read how in 2021, Pfizer, BioNTech, and Moderna were estimated to be making combined profits of $65,000 per minute from COVID-19 vaccines, see this news story on our website.
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Four years into a United States Congressional probe into Big Pharma’s potential abuse of a 2017 tax break, lawmakers have homed in on Pfizer, accusing the New York drugmaker of some of the most egregious financial maneuvering they’ve uncovered.
[Source: fiercepharma.com]
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Comment
This United States Senate investigation accuses Pfizer of strategically shifting profits offshore in 2019, effectively allowing the company to report zero taxable U.S. income despite earning approximately $20 billion in U.S. sales that year. The report further alleges that this practice was not an isolated incident, as Pfizer additionally reported no taxable U.S. income in 2018 or 2020. Other pharmaceutical companies, including Amgen, AbbVie, Bristol Myers Squibb, and Merck, have also been implicated in similar tax avoidance strategies.
According to the investigation, Pfizer used an accounting technique known as “round-tripping,” where it classified U.S. sales as foreign income to take advantage of a lower tax rate introduced under the country’s 2017 Tax Cuts and Jobs Act. This law reduced the corporate tax rate from 35 percent to 21 percent while allowing foreign subsidiaries of U.S. companies to pay an even lower rate of 10.5 percent.
The report also accuses Pfizer of making undisclosed tax agreements with countries such as Singapore and Puerto Rico, thus further complicating efforts to track its financial activities. Lawmakers argue that such tax strategies allow large pharmaceutical companies to shift billions in profits overseas while paying less in U.S. taxes than many working Americans.
To read how in 2021, Pfizer, BioNTech, and Moderna were estimated to be making combined profits of $65,000 per minute from COVID-19 vaccines, see this news story on our website.
Dr. Rath Health Foundation
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