Profit Allocation in the Pharma Industry—Who Wants a Slice of the Tax Pie?

; posted on
March 27th, 2018

As many countries are now fully armed to combat corporate tax avoidance, tax authorities have started insistently claiming their ‘‘fair share’’ of tax income. They all are looking at the same profit, yet aiming to get a bigger piece, if not the whole ‘pie’. Facing this perfect tax storm, multinational enterprises should be proactive in determining how the profit is allocated.

This statement is also applicable to multinational pharmaceutical companies illustrated by recent tax cases of Eli Lilly in Brazil (Case number 16561.720001/2011-10), Pfizer in the U.S. (Pfizer Inc. v. D.C. Office of Tax and Revenue, D.C. OAH) and many other similar disputes, as well as the blocking of Pfizer and Allergan merger due to potential tax advantages.



To provide multinationals with a simple tool for high level profit allocation, TPA Global suggest a practical and quantitative approach on how to allocate the profit within a multinational enterprise. This article applies the model on the pharmaceutical industry considering industry trends and market data.

Read the full article

Source:
Steef Huibregtse is CEO and Senior Partner and Maria Grigoryeva is an Associate at TPA Global.

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