The letter stated that AbbVie appeared to have shifted profits overseas while reporting a domestic loss in the United States to avoid paying U.S. corporation tax. The committee asked the company to provide answers to specific tax questions by June 16, 2021 at the latest.
On June 2, 2021, the U.S. Senate Finance Committee opened an investigation into AbbVie's international tax practices and how Republicans did 2017 TAxe L.aw enabled the company to avoid taxes on prescription drug sales in the United States.
In a letter to the biopharmaceutical company and viewed by TP News, Committee Chairman Ron Wyden, D-Ore. searched for information about the methods AbbVie uses to pay an astonishingly low effective tax rate, which averaged 9.5 percent in the three years since the 2017 Republican Tax Act came into effect.
The letter stated that AbbVie appeared to have shifted profits overseas while reporting a domestic loss in the United States to avoid paying U.S. corporation tax.
The committee asked the company to provide answers to specific tax questions by June 16, 2021 at the latest.
Ron Wyden, D-Ore. said, “AbbVie has been able to successfully leverage the offshore profit incentives contained in this act. AbbVie's effective tax rate fell to just 8.7 percent in 2018, the first year after the 2017 Republican Tax Act was passed, according to company documents. AbbVie then paid an effective tax rate of just 8.6 percent in 2019 and 11.2 percent in 2020, rates well below the statutory corporate tax rate of 21 percent in the United States and well below what AbbVie few paid years ago. Before the Tax Act 2017 was passed, AbbVie paid effective tax rates of 20 percent in 2016 and 19 percent in 2017. "
Wyden continued, “Instead of using the massive tax cuts granted to AbbVie by the Tax Act of 2017 to lower drug prices for American families, AbbVie decided instead to provide $ 10 billion in profit to its investors by it greatly increases the amount of money it spent on the purchase back its own inventory. AbbVie spent nearly $ 13 billion on share buybacks in 2018 and 2019, four times what it spent on share buybacks in the two years prior to the 2017 Tax Act. AbbVie spent $ 3.1 billion on share buybacks in 2016 and 2017. "
The author is Alex Hunter, Editor, TP News. He oversees and updates the publication and is a regular contributor to transfer pricing and international tax law. Alex can be reached at [email protected]