ATO singles out pharmaceutical industry for ‘special scrutiny’

According to The Sydney Morning Herald, the Economic References Committee could request the largest drug manufacturers operating in the country to outline their tax practices. After that, they might also be called to testify at a public hearing.Pharmaceutical giants have faced similar government inquiries in Europe and the United States where they seek to reduce their tax liability by moving cash offshore to designations seen as tax havens.US-based Pfizer, the largest source of drugs listed on the Pharmaceutical Benefits Sche, paid less than $ US 2 million in tax last year when it counted nearly $ US 2 billion in local revenues, nearly $US600 million of it from the federal Pharmaceutical Benefits Sche – it is the biggest recipient of public money under the PBS.Pfizer has 128 entities registered in tax havens, according to US-based Citizens for Tax Justice, and $US69 billion in assets held in those countries, which include Panama, Bermuda, Luxbourg and Singapore.Mr Jordan told the Senate inquiry that the ATO is currently involved in an “international collaboration” on the tax affairs of big pharma.”That industry donstrates some of the attributes of the tech industry with respect to intellectual property giving rise to a lot of value, housing intellectual property in low-tax, no-tax jurisdictions and paying large royalties,” Mr Jordan said.He said “highly structured” financing arrangents by certain companies had resulted in “very, very large tax deductions …??here in Australia”.The federal government signalled an assault on payments to drug makers before??the budget but backed off in favour of a new round of consultation.Pharmaceuticals peak body Medicines Australia said it would consider any request to make??a submission on behalf of its mbers, who it describes as “great ployers who invest a lot in research and development”.