Thursday 23 January 2020

Perrigo wants 'uncertainty' to end over €1.64bn tax bill

Questions regarding tax cases 'probably our biggest issue', according to group's CEO, writes Sean Pollock

Perrigo bought Elan Pharma International in 2013. Stock image
Perrigo bought Elan Pharma International in 2013. Stock image

Perrigo, a US pharmaceutical company headquartered in Ireland, has said it is focusing on taking some of the "uncertainty off the table" regarding tax cases here and across the Atlantic, including its €1.64bn one with Revenue.

Revenue's €1.64bn tax claim is connected with Perrigo's 2013 acquisition of the Irish company Elan, and the development of Tysabri, a drug used to treat multiple sclerosis.

The claim relates to Elan's sale of a 50pc stake in Tysabri to Biogen, a separate US pharmaceutical company. The Biogen Tysabri deal happened eight months prior to Perrigo's acquisition of Elan.

Through the deal, Elan received $3.25bn (€2.9bn) and a significant ongoing royalty stream.

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The proceeds of the sale were reported as trading income, which was charged at the corporation tax rate of 12.5pc.

In December 2018, Revenue hit Perrigo with the €1.64bn tax case. The agency said the cash should have been declared as capital gains, which are taxable at 33pc.

Perrigo appealed against the decision by Revenue last February, with a hearing set to appear before the Irish courts in April.

Ray Silcock, chief financial officer of Perrigo, said at the recent Morgan Stanley Global Consumer and Retail Conference that he would like to take some of the "uncertainty off the table", with regards to the outstanding tax cases against the firm, adding it was currently focusing efforts on achieving this aim.

He mentioned that it would be hard for it to just settle any of the cases for "large amounts of money", as he believes Perrigo has "strong defences" against them.

"That said, we would like to find a way to move forward," he said. "There are very long time lines here. I mean, the length of time before, if we went through the process and the appeals and other things that would happen, [means] there's years before they would get settled.

"But we would certainly like to find a way of taking some of the uncertainty off the table, and that's where we're focused right now: trying to get some of the uncertainty off the table.

"But we do believe, and I think this is the problem that we face, that ... we have strong defences against them.

"And, therefore, it's hard for us to just settle them for large amounts of money."

During the same conference, Murray Kessler, chief executive of Perrigo, described the tax uncertainty caused by these cases as "probably our biggest issue", adding that it was holding the business back.

"We're working through those issues to get rid of that uncertainty and let this stock start to really create value and provide value," he added.

A spokeswoman for Perrigo declined to comment on the status of the cases.

Revenue also declined to comment, on the basis of taxpayer confidentiality.

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