Pfizer paid little tax on $1.4b in COVID vaccine sales
Vaccine maker Pfizer paid just $29 million in local tax on its $1.4 billion of sales in Australia during the pandemic, raising political questions about the adequacy of the pharmaceutical giant’s tax payments.
Queensland Liberal National Party senator Gerard Rennick has referred Pfizer’s tax records to federal Treasurer Jim Chalmers and requested the Australian Taxation Office review Pfizer’s transfer pricing arrangements with its global affiliates.
In a response letter to Senator Rennick, Assistant Treasurer Stephen Jones’ office said he had passed on the concerns to the ATO and that government was committed to addressing multinational tax avoidance through better public reporting.
Pfizer’s local financial accounts lodged with the corporate regulator show it received revenue of $1.36 billion for the year ended November 30, 2022, a period when it sold the mRNA vaccine for COVID-19.
Its reported profit from operating activities was $90.2 million, equal to a profit margin of 6.6 per cent. That’s a fraction of Pfizer’s global profit margin of 34 per cent on $US100.3 billion of worldwide revenue.
Pfizer Australia had $1.13 billion of transactions with a related party in Ireland, which has a corporate tax rate less than half of Australia’s at 12.5 per cent.
Senator Rennick said Pfizer was an example of why Australia should reduce the local 30 per cent corporate rate and increase the withholding tax on profits sent offshore.
“A lower corporate rate would reduce the difference between the taxation of onshore and offshore profits,” he said.
Gerard Rennick expressed concerns about vaccine safety during the pandemic. Alex Ellinghausen
“While there is an arbitrage, the incentive is always going to be to shift the profits offshore and earnings to leak.”
Senator Rennick said the Tax Office should put more scrutiny on profits being sent offshore to lower tax jurisdictions.
“There should be someone in the Tax Office looking at worldwide profit ratios on all multinationals and comparing it to the Australian accounts.”
A spokeswoman for Pfizer said: “Pfizer Australia continues to be bound by and follows all local laws, regulations and legislation in regards to the company’s operations and pays the appropriate amount of tax in this country.”
Senator Rennick is a former treasury accountant at Westfield and Bank of Queensland, and has a master’s in taxation from the University of Sydney.
He expressed anti-vaccine views and drew attention to vaccine injuries during the pandemic.
He said his interest in Pfizer’s tax records was unrelated to the vaccine and there were examples of other multinationals diverting profits offshore.
Coca-Cola in tax dispute
The Coca-Cola Company shifted more than $430 million offshore which the ATO alleges it should have paid tax on because its local affiliate used the beverage giant’s branding, trademarks and other intellectual property.
The ATO says the US-based company received diverted profit tax benefits of $213.1 million and $221.5 million in 2018 and 2019 respectively, according to court documents in a dispute over tax assessments and penalties.
Labor has proposed new laws to require Australian public companies to disclose information about their subsidiaries in annual financial reports, using a so-called consolidated entity disclosure statement.
It will also change so-called thin capitalisation rules to limit the amount of debt deductions that multinational entities can claim in a single income year.
A thinly capitalised entity is one whose assets are funded by a high level of debt and relatively little equity.
Using tighter thin capitalisation rules, Labor wants to prevent companies claiming excessive debt deductions to minimise the tax they pay in Australia.
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