AstraZeneca has settled a longstanding tax dispute with U.K. authorities, promising to pay 505 million pounds, or $783 million. The main issue: Transfer pricing that affected more than 15 years of tax bills.
Transfer pricing is a big deal in Big Pharma, because of the global nature of the industry. Companies have to come up with various internal rates to charge one another when units in different countries transact business.
After negotiating with the U.K. government, AstraZeneca has agreed to pay 350 million pounds, or almost $540 million, next month. The remaining payment of 155 million pounds will be due in March 2011.
A lot of money, yes, but it could have been worse. In fact, the company expected it to be worse. It's boosting its earnings forecast as a result: to $5.90 to $6.30 per share, up from $5.75 to $6.15.
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