Glaxo will pay $3.4B to settle IRS dispute

Philadelphia Inquirer, The, September, 2006 by Thomas Ginsberg

GlaxoSmithKline PLC has agreed to pay the U.S. Internal Revenue Service about $3.4 billion to settle a dispute over the way it valued the profits of its ulcer medication Zantac, allergy drug Flonase and a half-dozen other key products. The U.S. tax agency, in a statement, said today its settlement with the U.S.

subsidiaries of GlaxoSmithKline involves "the largest single payment made to the IRS to resolve a tax dispute." The dispute, over a practice called "transfer pricing," centered on the level of GlaxoSmithKline's reported U.S. profits on certain products and the amount of "intercompany" transfers between its British parent corporation and its U.S. subsidiaries. Other multinational drug companies are involved in similar disputes with the IRS. Mark W. Everson, the...