Multinational drug firms in Australia faced a string of barbs in hearings held by a Senate panel into transfer pricing that included a reference to a fictitious German World War II prison camp guard.
|Australia Tax Commissioner Chris Jordan|
Nine drug companies submitted separate testimonies ahead of the July 1 Australian Senate inquiry on tax avoidance and each one said the highest reporting standards are followed.
The inquiry has zeroed in on drugmakers attempting to "back profits out" of Australia through a combination of transfer pricing and royalty payments to subsidiaries in other countries, with Tax Commissioner Chris Jordan remarking in June that pharmaceutical companies were among the "more aggressive [on] transfer pricing."
Country executives from Pfizer ($PFE), AstraZeneca ($AZN), GlaxoSmithKline ($GSK), Johnson & Johnson ($JNJ), Sanofi ($SNY), Merck ($MRK), Roche ($RHHBY), Novartis ($NVS) and Eli Lilly ($LLY) however probably weren't prepared for comments made by Independent senator Nick Xenophon, the Australian newspaper reported.
He said the companies must be fans of Sergeant Schultz of the U.S. television sitcom "Hogan's Heroes."
"They know nothing, they see nothing."
The comments came as the executives said they were not privy to practices of other similar units on importing and pricing medicines in other countries.
That led Jordan and deputy commissioner Mark Konza to warn that ignorance of parent company pricing policies would find the executives in breach of new transfer pricing laws and OECD guidelines, the Australian said.
Committee chairman and Labor senator Sam Dastyari said the 9 largest pharmaceutical companies paid only A$85 million in tax last year on combined revenues of $8 billion, with A$3.5 billion coming from the Pharmaceutical Benefits Scheme, the Australian reported.
Among other companies mentioned, the inquiry said that GlaxoSmithKline paid just A$1.6 million in tax and Novartis A$7.2 million in tax, the Australian said.
The hearings may set the stage for new legislation or rules on transfer pricing practices in Australia for a wide variety of companies, including Apple ($AAPL) and Google ($GOOG), according to reports
- here's the story from The Australian