Senate Finance Committee Chair Ron Wyden, D-Ore., yesterday continued his investigation of Big Pharma’s tax practices with a final request to Amgen for voluntary compliance in providing information about efforts to avoid billions in taxes through profit-shifting to subsidiaries in Puerto Rico.
Wyden’s letter follows a previous request to Amgen on August 11, 2022. While Amgen responded to the August letter and has engaged with the committee, it refused to provide specific information related to pre-tax earnings, profit margins, and tax paid in the United States.
With respect to Amgen specifically, Wyden is examining sales of the company’s best-selling arthritis drug Enbrel. While Enbrel sales are overwhelmingly in the United States, it appears that its income from Enbrel and other drugs are overwhelmingly booked in jurisdictions treated as foreign for tax purposes, including Puerto Rico. Wyden is seeking information about the discrepancy between where drugs are sold and where income is booked for tax purposes.
Amgen in 2021 generated 70 percent of its sales in the United States yet reported just 28 percent of its pretax income in the United States. Additionally, the IRS has claimed that Amgen shifted nearly $24 billion in income to subsidiaries in Puerto Rico in order to avoid paying billions of dollars in federal taxes on U.S. prescription drug sales. Amgen has not been willing to clarify how much taxable income it books in offshore subsidiaries.
“As part of this investigation, I requested detailed information from Amgen to understand the methods by which Amgen paid an effective tax rate of 12.1 percent in 2018, 14.2 percent in 2019, 10.7 percent in 2020 and 12.1 percent in 2021; rates that are substantially lower than the statutory U.S. corporate tax rate of 21 percent. Specifically, I requested country-specific information related to Amgen’s pre-tax earnings, profit margins, employee headcount and tax paid for tax years 2018 – 2021. This included copies of Amgen’s IRS form 8975, an annual country-by-country tax reporting required for large corporations with over $850 million in annual income. I also requested information related to Amgen’s taxable income for years 2018 – 2021, including how much of Amgen’s taxable income was reported by controlled foreign corporations (CFCs),” Wyden wrote. “Unfortunately, Amgen declined to provide the committee this information, choosing to keep secret how much of its profits are reported by offshore subsidiaries that are treated as foreign for tax purposes. As noted in my previous letter on this matter, there appears to be a substantial discrepancy between where Amgen generates the vast majority of its prescription drug sales and where Amgen books profits from those drug sales for tax purposes.”
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