Shire’s chief executive has defended the company’s tax arrangements after being identified as one of the beneficiaries of alleged “industrial scale” avoidance orchestrated by PwC, the accountancy group.
Flemming Ornskov said the Dublin-based company had “nothing to hide” and was “trying to do the right thing” by running the pharmaceuticals company as efficiently as possible to maximise returns for shareholders and increase investment in new medicines.
Shire has been a focus of inquiries by the UK's public accounts committee into the use of intra-company loans by PwC clients to shift profits to Luxembourg, where the company paid tax at 0.0156 per cent. Margaret Hodge, chairwoman of the committee, in December labelled Shire's behaviour "outrageous".
Shire is one of several drugmakers to have shifted its tax domicile to Dublin to benefit from Ireland’s low corporate tax rate. It has been singled out for scrutiny by Ms Hodge’s committee in part because the company was previously based in the UK and remains listed in London.
Last week it emerged that the company may be able to avoid paying Irish tax on a €1.44 billion payment it received after a merger with another drug maker – Abbvie – was called off.
Mr Ornskov said that "four, five hundred companies" were using similar structures in Luxembourg and that they were "fully legal". The Luxembourg structures were revealed by The Irish Times and other members of the International Consortium of Investigative Journalists last year in the Luxleaks investigation.
The nature of global pharmaceuticals companies meant their taxes would always be complex, he added, because manufacturing, sales and intellectual property were spread across the world.
"We're trying to do the right thing for our stakeholders, because in the end, the more we can invest in research and development, the more we can serve the patients because none of the R&D today is easy or inexpensive."– Copyright The Financial Times Limited 2015