It emerged recently that a hearing by the UK's Special Commissioners of a transfer pricing dispute between HM Revenue and Customs and pharmaceutical firm, AstraZeneca has been put back until April 2010.
Although the exact details of the case are unclear, and both parties are reluctant to comment on an ongoing matter, the dispute is thought to centre on the portion of the firm's intellectual property portfolio held in Puerto Rico, which allows the firm to benefit from the lower tax regime in place there with regard to royalty payments on various products.
The case is being viewed as something of a test case by multinational firms in similar positions. The firm itself appears confident, however (despite having reportedly put aside nearly GBP900m to cover transfer pricing liabilities worldwide), and was quoted by the Guardian this week as stating that:
"All prices paid on inter-company goods and services are set in accordance with the arm's length principle...as enshrined in UK law since 1999. All transactions involving the UK are fully disclosed to HMRC."
AstraZeneca last week unveiled lower Q4 operating profits, and stressed the need for 'prudence' going forward.
"Our business is recession resistant but not recession proof," Chief Executive David Brennan was quoted by Forbes as observing.
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