King of “Big Pharma” thanks to its vaccine against Covid-19, Pfizer would also be a champion of tax optimization. This excerpt from “Complément d’Enquête” focuses on a technique for reducing one’s tax.
For the purchase of Pfizer vaccines against Covid-19, which propelled the pharmaceutical giant to the head of “Big Pharma”, the European Union has spent at least 35 billion euros. “Further Investigation”, in a document released on May 4, 2023, sought to find out where this money was going. The journalists studied the original copy of the first sales contract, signed in 2020. It provides for the transfer of an advance of 700 million euros to a bank account domiciled in Dublin. By cashing in the profits of the vaccine in Ireland, a country with low tax rates, would the Pfizer group try to reduce its taxes?
“Complément d’Enquête” had access to a confidential internal document. It reveals a system that could come under tax optimization. This is a report produced at the request of elected staff: in 2019, they had the company’s accounts appraised. Here is what the report says: “The Pfizer group is organized to extract the maximum profits from the markets where it operates, to take them up in tax havens, Ireland, the Netherlands and Luxembourg in the lead.”
The “transfer pricing” process
The report explicitly cites the so-called “transfer pricing” process, a legal technique that artificially reduces tax through subsidiaries. What is the mechanics of transfer pricing? To sell in France a drug that it would have manufactured (for example) in Belgium, a multinational X does not sell it directly to Social Security but to a subsidiary located (still for example) in Ireland, where taxation is lower . This Irish subsidiary then sells the drug to another subsidiary, French, and it is she who will finally sell it to Social Security. The objective of this arrangement is to leave a maximum of profits in the Irish subsidiary, where the corporation tax amounts to only 12.5%, against 25% in France. Could a similar system still be in effect today at Pfizer?
“Complementary investigation” asked a financial expert to delve into the accounts of Pfizer France for 2021, the year of record profits linked to sales of the vaccine. According to him, the company would voluntarily minimize its profits to pay as little tax as possible – which is not illegal. “Pfizer, in France, pays very precisely 15.3 million euros in corporate tax, in 2021.” A number that can be taken as “really weak, even “ridiculously weak”, compared to the 2.9 billion turnover in 2021 of the French branch of the group.
Contacted for this investigation, the Pfizer group indicates that it complies with the tax laws of the countries in which the group operates and pays all its taxes due.
Excerpt from “Pfizer: who’s afraid of the big bad lab?”, a document to see in “Complementary investigation” on May 4, 2023.
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