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S Nikhil Kumar
editS Nikhil Kumar has vandalized this page; he is not the founder of AbbVie. Saad Mirza (talk) 12:03, 24 December 2022 (UTC)
Tax avoidance
editInformation to consider for addition to this article:
( Source: https://www.commondreams.org/news/senate-big-pharma-tax-avoidance )
The Senate Finance Committee released a new report Thursday detailing how the GOP's 2017 tax cut law allowed U.S. pharmaceutical companies to ramp up their tax avoidance schemes as they continued charging Americans exorbitant prices for prescription drugs.
Published as part of an ongoing investigation into the pharmaceutical industry's tax practices, the report cites new data showing that "75% of all Big Pharma income is reported offshore for tax purposes" even though much of their revenue comes from patients in the U.S.
To illustrate how the tax avoidance scheme works, the report offered this scenario: "The U.S. customer buys the pharmaceutical product from a U.S. sales arm of the U.S. pharmaceutical company. That U.S. sales arm purchased the product from the offshore [controlled foreign corporation (CFC)] of that same pharmaceutical company. Little if any profit from the sale is left in the U.S. sales entity, and most of the profit is reported by the CFC... The CFC then is able to distribute that profit, generally tax-free, to its U.S. parent company. The profit makes a round trip—from the U.S. sales arm, to the offshore CFC, and then back to the U.S. parent."
AbbVie, one of the largest pharmaceutical companies in the world, reported 100% of its 2019 income as offshore for tax purposes despite making 72% of its worldwide sales to U.S. customers that year, according to the committee's findings. AbbVie's effective tax rate in 2019 was just 8.6%.