Drug group Shire ‘very comfortable’ with tax practices

Dublin-based company paid $56.1 m tax on $3.4bn of profits last year - an effective rate of 1.65%

 

Tax planning by Dublin-based Shire Pharmaceuticals is in line with most multinationals, shareholders were told at the company’s annual general meeting.

Shire came under attack from Britain’s parliamentary public accounts committee earlier this year over its tax affairs after results for 2014 showed that its effective tax rate was less than 2 per cent.

At a brief annual meeting, Karol Balfe, of Christian Aid, representing activist shareholder ShareAction, asked whether, in light of recent adverse publicity, Shire’s audit committee had considered the group’s tax practices.

ShareAction, a British non-profit that campaigns for responsible investment by pension funds and other institutional investors, put the same question to last year’s AGM.

Ms Balfe said figures for 2014 showed the company continued to pay “remarkably low rates of tax”.

“ Shire enjoyed effective tax rates of less than 2 per cent in 2014, paying $56.1 million [in tax] on profits of $3.34 billion despite that the majority of sales came from pills prescribed in US, one of the highest corporation tax jurisdictions,” she said.

Noting that the UK PAC had criticised Shire and its tax adviser, PricewaterhouseCoopers, for engaging in what it called tax avoidance on an “industrial scale” after revelations from the LuxLeaks files, she said shareholders had a right to be concerned at the reputational damage of such strategies. This was especially so in a climate where there was a trend towards regulatory crackdown on abusive tax practices, such as the OECD’s Base Erosion and Profit Shifting (Beps) initiative.

Chairwoman Susan Kilsby said the board of Shire we very comfortable with where it stood on tax. She said the company had a duty to all its stakeholders to manage its business responsibly, “to manage tax affairs in a way to minimise uncertainty and that allow us to plan for the future”.

She acknowledged the issue of corporate tax was very much in the news currently and said the board continued to evaluate the issues surrounding tax.

Dominic Blackmore, who heads the drug group’s audit committee, said: “The plan that is in place is largely mainstream for most multinationals.”

Shire moved to Ireland in 2008 after the then Labour government in the UK announced plans to increase taxation for corporates. Shire has said consistently that it complies fully with all tax obligations in the jurisdictions where it operates.

Having seen off an unsolicited approach from rival Abbvie, the company completed a $5.2 billion deal for rare disease drugs group NPS Pharmaceuticals and has said publicly that it is looking to grow organic product sales to $10 billion by 2020. Product sales jumped 23 per cent last year to $5.83 billion.

The board won overwhelming support in polls on all 19 resolutions put to the meeting.