Anglo-Swedish pharmaceutical company AstraZeneca has settled a long-running dispute with the UK exchequer by agreeing to pay £505 million in back taxes
AstraZeneca said in a statement yesterday that it has settled a long-running transfer pricing issue with the government in the UK by agreeing to pay £505 million to HMRC to resolve all claims made by the government for the 15-year period from 1996 to the end of 2010.
The transfer pricing dispute in the UK relates to where, one division or subsidiary of a company sells goods or services to another division or subsidiary of the same company in another country.
The company than normally declares its profit in the country where the tax rates are lower.
The government alleged that AstraZeneca was paying below the market rate for certain products it bought from one of its overseas subsidiaries.
The London-based AstraZeneca, which generated global revenues of $32.8 billion in 2009, said that it will make the payment in two instalments, the first instalment of £350 million in March 2010, and the second and final instalment of £155 million in March 2011.