U.S. Senate Finance Committee Chairman Ron Wyden, D-Ore., Opened an investigation into AbbVie’s international tax strategies on June 2, accusing the biopharmaceutical company of using the 2017 U.S. tax law amendment to channel profits overseas Shift and avoid taxes on prescription drug sales in the US.
Instead of taking advantage of the “massive” tax cuts in the Tax Act of 2017 to lower US drug prices and bring them more in line with other countries’ payments for the drugs, AbbVie decided instead to offer its investors a substantial increase in the amount of money for the drug Weiden said in a letter to the company to buy back its own shares.
“AbbVie appears to be moving profits overseas while reporting a domestic loss in the United States to avoid paying US corporation tax, and the current US international tax system appears to encourage this,” he said.
According to Weyden, AbbVie’s effective tax rate dropped to just 8.7 percent in 2018, just a year after the Republican Tax Act was passed in 2017. AbbVie then paid an effective tax rate of just 8.6 percent in 2019 and just 11.2 Percent in 2020, “Rates well below the statutory corporate tax rate of 21 percent in the United States, and well below what AbbVie just paid.” a couple of years ago, ”he said. AbbVie paid effective tax rates of 20 percent in 2016 and 19 percent in 2017 before the law was passed.
AbbVie was able to do all of this by filing revenue and filing patents in low-tax countries, Weyden cited corporate documents and public reports.
He asked the company to answer specific questions about these tax arrangements and to submit its answers to the Senate Finance Committee by June 16.