Pharmaceutical giants named and shamed in tax avoidance investigation
Credit: 9 News
Four pharmaceutical giants have been named and shamed for depriving Australia of $215 million a year in tax avoidance.
Johnson & Johnson, Pfizer, Merck Sharp & Dohme (MSD Australia), and Abbott – which make household name brands like Band Aid, Baby Oil, Centrum and ChapStick –were found to have unfairly avoided paying the tax by posting a combined seven percent loss in Australia, while simultaneously posting an overall average 31 percent profit in tax havens.
The new Oxfam report Prescription for Poverty, uncovered evidence that four of the world’s largest global pharmaceutical companies “systematically stash their profits in overseas tax shelters” like Belgium, Ireland, the Netherlands and Singapore.
Their avoided annual tax in Australia equates to the most of more than five million medical prescription scripts – or nearly the full cost of Medicare’s urgent after-hour home visits annually.
Johnson & Johnson, Pfizer and MSD Australia have responded to the report by saying they comply with tax laws, with Johnson & Johnson noting it paid 23 percent tax for the 2015-16 financial year.
Tax avoidance is not illegal – but nor is it in line with the spirit of the law.
Dr Helen Szoke, CEO of Oxfam, said it’s a big concern that multinationals are avoiding paying taxation in countries where they derive profit – and that it’s an increasingly common practice.
“In this country, we have had a lot of debate about taxation, about the need to resource basic public services,” she said.
“Every Australian pays their fair share of tax – and if they don’t, the tax man comes after them.
“We are saying the same rules should apply across the world to multinational companies.”
The report concluded that reform is needed to strengthen rules and mandate country-by-country financial reporting to give the financial regulator ASIC oversight and stop multinationals avoiding tax.
Based on an examination of financial activities by the companies from 2013 to 2015, the report estimated Pfizer avoided paying $94 million per year in tax in Australia.
For Johnson & Johnson, the figure was $92 million, MSD Australia (Merck & Co) was $22 million and Abbott was $7 million.