AstraZeneca to pay UK £505m to settle tax dispute

By Graham Ruddick, City Reporter (Pharmaceuticals) Published: 8:06AM GMT twenty-three February 2010

AstraZeneca

AstraZeneca, the curative group, will have the payments after claims done by HMRC over the argumentative issue of send pricing.

The allotment relates to the 15-year duration from 1996 to finish of this year and the remuneration will be in done in dual tranches, with the initial �350m due in March.

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Transfer pricing relates to the volume a multinational association pays to buy products or services from the abroad subsidiaries.

The issue has turn controversial, and key for governments, since authorities have turn heedful of companies environment artificially low prices to move resources to countries with a reduce taxation rate so they can thus compensate less tax.

Ted Keen, a taxation partner in Ernst & Young"s send pricing team, said: "AstraZeneca"s allotment with HMRC is a timely sign to multinationals about how most is at interest in send pricing disputes and an denote of HMRC"s heightened inspection on this issue.

"As governments opposite the world, together with the UK, poke for taxation revenues to equivalent flourishing bill deficits, send pricing investigations see set usually to increase.

"For a little years HMRC have been melancholy to make send pricing some-more vigorously, quite in sectors similar to hold up sciences and high tech, where send pricing around rarely profitable unsubstantial skill can have a poignant outcome on the UK taxation base."

AstraZeneca is one of the greatest employers in the UK, where it has 11,000 staff, but insisted on Tuesday that it has a "good relationship" with HMRC.

The company, the second largest UK drug builder after GlaxoSmithKline, is not thought to have any plans to re-domicile outward the UK taxation system of administration and was gratified with Government"s offer in the pre-Budget inform to reduce house taxation on products whose obvious was lodged in the UK.

AstraZeneca, that is led by arch senior manager David Brennan, had already set in reserve supplies of $1.6bn (�1bn) for a series of send pricing cases around the universe and pronounced that the allotment with HMRC would essentially concede it to lift the forecasts for the year. This is since the organisation taxation rate for 2010 will be "approximately dual commission points reduce than prior guidance".

The association increasing the aim for core gain per share from $5.75-$6.15 to $5.90-$6.30. The shares rose 7p to �28.17.