Pfizer under Italian finance probe over alleged $1.2B profits offshoring: Bloomberg

Italy’s tax authorities are putting Pfizer’s taxes under the microscope.

In a new investigation, Italy's finance authorities allege that Pfizer's Italian unit, Pfizer Italia Srl, hid profits of at least 1.2 billion euros ($1.2 billion) by transferring money to Pfizer units in other countries, Bloomberg reports from people familiar with the investigation.  

Specifically, the allegations reportedly say that Pfizer Italia Srl transferred “excess capital” to Pfizer affiliates in the U.S. and the Netherlands to avoid taxes that could be as high as 26%. The investigation began this February and covers 2017, 2018 and 2019, the people told Bloomberg. In those three years, Pfizer’s global adjusted net profit reached $33 billion.

Once the investigation is complete, Italy’s tax agency will review the results. The agency can assess potential fines and tax payments if they are deemed warranted, Bloomberg reports.

The Italian unit is nearly 70 years old and employs about 2,000 workers. It has a plant in the center Marche region, which produces pills for cancer and nervous system disorders, and one in Sicily that focuses on sterile injectable drugs including antibiotics.

"The Italian tax authorities routinely audit and investigate Pfizer taxes, and Pfizer cooperates with such audits and investigations," a Pfizer spokesperson told Fierce Pharma. "Pfizer complies with the tax laws and requirements of Italy."

It’s not a rare occurrence for a company to offshore profits to sidestep taxes. This summer, a large Senate Finance Committee investigation targeted companies including Amgen, Merck, AbbVie and Abbott for avoiding U.S. taxes by using their subsidiaries in low- or zero-tax jurisdictions.

The committee found that Amgen garnered $18.2 billion in U.S. sales in 2021 but reported just $1.85 billion in U.S. pretax income in the same year.

Meanwhile, Merck was accused of offshoring its Keytruda profits, paying a tax rate of 11% in 2021, which is about half of the U.S. corporate tax rate of 21%. In 2021, the Senate committee accused AbbVie of shifting profits offshore while reporting a domestic loss to avoid paying U.S. corporate income taxes, Sen. Ron Wyden, chairman of the committee, said in a letter to CEO Richard Gonzalez.