The Pharmaceutical Journal
Vol 272 No 7282 p47
17 January 2004

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GlaxoSmithKline (www.gsk.com)

GSK's $5bn tax bill

GlaxoSmithKline has been served with a claim for $2.7bn (£1.5bn) in taxes by the US for the years 1989–96. Further claims could push the bill to over $5bn.

The claim centres around the use of transfer pricing by the former Glaxo and GlaxoWellcome companies. Transfer pricing is used by pharmaceutical companies to allocate for tax purposes the costs of research, manufacturing and sales of products to different country subsidiaries. The American claim says that Glaxo’s transfers were inconsistent with those of other companies, including SmithKline Beecham, now part of GSK. The claim follows the collapse of talks between UK and US tax authorities over the issue.

The company said that the taxes it paid in the US for 1989–2000 were more than sufficient to reflect its US operations.