UK drug giant, GlaxoSmithKline, has been hit with yet another tax bill as part of a long-running dispute with the US Internal Revenue Service. The firm says that it has received a notice for $1.9 billion dollars in additional taxes, which the US government claims legacy company, Glaxo Wellcome, owes for the years 1997 to 2000.
GSK says it disagrees with this claim, which covers taxes on profits for Glaxo heritage products – including the blockbuster ulcer drug, Zantac (ranitidine) – between the US and other countries, and the company believes that it has paid all the taxes owed to the US government for these years. It says it will contest the claim, believing the claim is inconsistent with the treatment of other pharmaceutical companies, including another GSK legacy company, SmithKline Beecham.
This new bill, plus an estimated $700 million GSK estimates will be added on as interest, significantly augments the $2.7 billion imposed last year for the 1989 to 1996 period, plus an earlier $2.5 billion interest payment [[07/01/04b]].
GSK had attempted to resolve the dispute by referring it to negotiations between the US and UK tax authorities, but claims the discussions collapsed when the UK supported the GSK position that no additional taxes were due to the IRS. The firm is planning to ask the US tax court to consolidate the latest claim with a case currently pending for the 1989-1996 tax years. A provisional date for the trial has been set for October 2006.