UK biopharmaceutical giant AstraZeneca today said tax authorities in the UK and the US have agreed to the terms of an advance pricing agreement regarding the transfer pricing for its US business.
Under the agreement, AstraZeneca will now pay just $1.1 billion in taxes, or less than half the $2.3 billion it had budgeted for in its accounts to resolve the complex transfer pricing issues that have taken many years to resolve.
As a result of the agreement, the UK Revenue & Customs will hand back an undisclosed tax payment to be passed on to the US Internal Revenue Service (IRS), with whom AstraZeneca has concurrently reached an agreement on a related valuation dispute arising over the integration of its US businesses in 2000, after the merger of Sweden's Astra AB and Zeneca Group plc (which was spun out of ICI's pharma, agro and specialities business in 1933) into AstraZeneca in 1999.
"Based on these agreements, AstraZeneca now expects to pay a net amount of $1.1 billion to resolve all US transfer pricing and related valuation matters for all periods from 2000 to the end of 2010," the company said in a statement.
AstraZeneca, the world's seventh largest pharmaceutical firm, said it had budgeted for $2.3 billion to settle tax claims.
The transfer pricing - or inter-company tax accounting through which multinationals opt for a jurisdiction of their choice to report certain earnings for tax reasons - covers the 13-year period from 2002 to the end of 2014.