Drugs manufacturer Eli Lilly has become the latest company to announce the repatriation of billions of dollars in overseas earnings under the temporary tax break legislated as part of the American Jobs Creation Act.
In a statement concerning the company’s results for 2004, Eli Lilly reported a net loss of $2.4 million, primarily due to a $465 million tax expense on the expected repatriation to the United States of $8 billion of eligible overseas earnings in 2005.
Under the AJCA, firms with substantial profits earned abroad are encouraged to repatriate the income at a temporary rate of tax 5.25% instead of the usual 35%, a move which lawmakers hope will spur domestic investment.
Eli Lilly’s announcement follows the decision by pharmaceutical firm Johnson & Johnson to repatriate $11 billion in foreign income.
According to some estimates US companies could return around $320 billion in overseas earnings to the US during the year-long tax break.
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