18/01/22

US: Offshore Tax Deal Draws Scrutiny.

As published on treasuryandrisk.com, Tuesday 18 January, 2022.

The head of the Senate Finance Committee is seeking details from Bristol-Myers Squibb Co. about a decade-old offshore deal that let the pharmaceutical giant cut its tax rate by more than 30 percentage points.

Senator Ron Wyden sent a letter Tuesday to Bristol-Myers CEO Giovanni Caforio asking him to explain a 2012 transaction that shifted the company’s intellectual property profits (IP) to Ireland and resulted in reducing its tax rate to -6.9 percent that year, from +24.7 percent the year before.
The Oregon Democrat also asked for details about how the company’s tax and legal advisers, accounting firm PwC and law firm White & Case LLP, were involved in the process. Bristol-Myers said in a statement that it has received the letter and will cooperate with Wyden on his request.

“I am investigating the means in which large multinational corporations shift profits overseas as a way to avoid U.S. taxes,” Wyden said in the letter. “This includes the role played by professional services and law firms in assisting these corporations in the development and execution of abusive tax shelters that allow these businesses to pay a tax rate that is a fraction of that paid by the average hard-working American family.”

The inquiry comes as Democrats’ plans to impose new restrictions on corporations moving profits offshore have stalled in Congress. President Joe Biden’s proposed Build Back Better Act includes several new measures that would regulate how U.S. companies operating abroad can move profits to foreign subsidiaries in lower-tax countries. It would also impose a new 15 percent minimum tax on profits earned offshore.

Wyden asked the company to respond by January 28.