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Amgen's low tax rates grab the attention of top Democratic senators

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Last year, Amgen paid just over 12% in taxes on its $7 billion pre-tax profit, well below the US corporate tax rate of 21%. The year before, the California-based biotech company paid even less, at 10.7%, and its effective tax rate is below his 16%, except for his one year in the last decade.

Ron Wyden, a powerful Democrat who chairs the Senate Finance Committee, wants to know how. In a letter sent to Amgen CEO Robert Bradway on Thursday, Wyden asked pharmaceutical companies for detailed country-by-country information on pre-tax earnings, profit margins and taxes paid. The senator also explained how Amgen’s operations in Puerto Rico, a region that enjoys different tax status under federal law, will affect the bills the company owes to the U.S. government. I am looking for

“Amgen, a U.S.-based multinational pharmaceutical company with $26 billion in annual sales primarily to U.S. customers, pays a lower tax rate than postal service employees and preschool teachers. The American public deserves to understand why,” Wyden wrote. letter.

Amgen posted approximately $18.2 billion in U.S. sales last year, but reported pre-tax profits of only about $1.9 billion from those sales. By comparison, the pharmaceutical company reports $7.8 billion in revenue in the rest of the world and about $4.9 billion in pre-tax profits.

Wyden’s investigation is part of a broader investigation by the Finance Commission into lowering the tax rate paid by pharmaceutical companies after the Tax Cuts and Jobs Act of 2017. An analysis of the law by BioPharma Dive found that 10 of the largest US pharmaceutical companies paid him $6 billion less in taxes in 2020 than he did in 2016 before the law was enacted. I was.

Wieden recently sent a similar letter to Merck, and the Finance Committee issued a report in early July about how AbbVie exploited subsidiaries in foreign low-tax jurisdictions such as Bermuda. did.

For Amgen, Wyden is focused on Puerto Rico, where biotech has a large manufacturing base. “Unfortunately, exploiting subsidiaries in Puerto Rico and other low-tax jurisdictions appears to have been a longstanding practice for Amgen,” Wyden wrote.

Under the 2017 tax law, income from Puerto Rice corporations is treated as foreign and taxed at a rate of 10.5%, which is lower than the statutory minimum rate of 21%. In its 2021 annual report, Amgen said that “substantially all” of the benefit to the company’s effective tax rate from foreign earnings is a “result” of its operations in U.S. territories.

Further, Wyden points out that it will be eligible for tax incentives until 2035, details for which Wyden seeks more information.

Wieden and the Finance Committee are not the only ones interested in Amgen’s tax practices and operations in Puerto Rico. According to The Wall Street Journal, the Internal Revenue Service has reimbursed him for $10.7 billion in tax owed to biotech companies as a result of him under-reporting taxable profits by $24 billion between 2010 and 2015. are reportedly seeking

In a regulatory filing, Amgen said it disagrees with the IRS calculation and disputes the agency’s allegations. The company’s annual report reads, “We believe it is appropriate to accrue an income tax liability.” “[H]However, due to the complexity of income tax provisions and the uncertain resolution of these issues, the ultimate result of tax matters may be significantly more than is owed. ”

Of particular interest to Wieden is Enbrel, Amgen’s best-selling inflammatory drug, which is expected to generate about $75 billion in sales by 2020. monopoly until 2029 when biosimilar competition is expected to enter the US market.

Wyden asks which companies own Enbrel’s patents and where Amgen paid taxes on Enbrel’s sales between 2018 and 2021.

Lawmakers are seeking similar information from Merck related to the best-selling cancer drug Keytruda.