Pharmaceutical giant AstraZeneca has settled a £505 million tax dispute with the Government following claims of transfer pricing.
The firm has since raised its forecast for 2010 after agreeing payment terms with tax officials which will see AstraZeneca make two multimillion-pound payments over the next two years to pay off the bill.
The first payment of £350 million will be made in March this year with a final instalment of £155 million a year later in March 2011.
A review of the group’s tax rate following the settlement meant share prices at the Anglo-Swedish firm have been given a welcome boost.
“As a result of this release, the group tax rate for 2010 will be approximately two percentage points lower than previous guidance,” the company said in a statement.
“AstraZeneca has increased its 2010 target for core earnings per share from $5.75-$6.15 to $5.90-$6.30 per share to reflect this lower than expected tax rate.”
The issue of transfer pricing – the practice of inter-company selling and purchasing of goods and services – has been the focus of fresh scrutiny by tax bosses who are seeking to tackle abuse of the practice in the pursuit of profit.
Copyright Press Association 2010