Australia zeroes in on pharma in transfer-pricing probe

Australia has singled out the pharmaceutical industry for special scrutiny in its examination of corporations moving money offshore to avoid local taxes.

After a Senate tax committee revealed and shamed technology giants such as Apple ($AAPL), Google ($GOOG) and Microsoft ($MSFT) for that practice, the nation's tax commissioner steered the panel in the direction of "big pharma" to find other culprits.

The method used to calculate sales between countries and regions is known as transfer pricing and has been in the spotlight in Europe, Asia and America as part of tax strategies that draw regulatory scrutiny.

According to the Sydney Morning Herald, the Economic References Committee could request the largest drugmakers operating in the country outline their tax practices. After that, they might also be called to testify at a public hearing.

Pharmaceutical giants have faced similar government inquiries in Europe and the United States where they seek to reduce their tax liability by moving cash offshore designations seen as tax havens.

An Australian newspaper reported earlier that U.S.-based Pfizer ($PFE), the largest source of drugs listed on the Pharmaceutical Benefits Scheme, paid less than U.S.$2 million last year when it counted nearly U.S.$2 billion in local revenues, nearly U.S.$600 million of it from PBS.

The industry group Medicines Australia said it prepared a filing noting the usual industry claims of great investments in research and development.

- here's the story from the Sydney Morning Herald