In what one U.S. lawmaker described as probably the “largest tax-dodging scheme” by a pharmaceutical firm in historical past, Pfizer bought $20 billion in medicines to U.S. clients six years in the past, however didn’t report any earnings from these gross sales on its 2019 tax returns as a result of all the revenue was supposedly earned offshore, in keeping with an investigation by the Democratic workers of the Senate Finance Committee.
Consequently, the corporate was in a position to keep away from paying billions of {dollars} in federal revenue taxes and, actually, additionally didn’t report any taxable revenue within the U.S. for 2018 and 2020. To perform this, Pfizer used what was described as an “egregious tax gimmick” referred to as “round-tripping,” a tax avoidance scheme that includes making gross sales to U.S. clients, however treating the earnings as international revenue for tax functions.
Typically, round-tripping refers to offshoring manufacturing to a international subsidiary positioned in a foreign country or jurisdiction with decrease tax charges. The listing contains Puerto Rico and Eire, the place Pfizer has varied operations. One other tactic is to shift mental property rights to such havens or interact in switch pricing, which includes an organization promoting itself merchandise at artificially excessive costs.
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