Pfizer has become a household name in the past year and is generating a nice chunk of money as a result ā even more, considering the company is avoiding paying millions in tax.
By diverting the majority of its profits through tax havens like the Netherlands, Luxembourg, and Ireland, Pfizer’s billions in profits remain largely tax-free.
The investigative journalism platform Follow the Money (FTM) published the findings, arguing that despite coronavirus vaccine research being paid for with tax dollars, Pfizer escapes the clutches of the tax office in multiple countries.
Tax money goes in but doesn’t come out
The company is expected to have 21 billion euros in sales this year thanks to the coronavirus vaccine it created with the German company BioNTech. FTM reports Pfizer says the profit margin to be “high in the twenties” ā if the profit margin is just 25%, the company stands to make 5.2 billion euros.
“A lot of money has always been spent on the pharmaceutical industry, and that will now be a lot more,” Vincent Kiezebrink of the Foundation for Research on Multinational Enterprises (SOMO), an independent research group, tells FTM. “Those companies will only become more powerful. And while a lot of public money goes to the development of medicines, this industry makes extensive use of tax havens.”
READ MORE | The Netherlands is a top-three tax haven for multinationals and the super-rich
Pfizer’s annual reports confirm the same: in 2019, it mentions an “effective tax rate” of 13.5%, or around $2 billion USD. However, that’s only in the company’s home country: despite holding an office in the Netherlands with 220 employees, the company pays nothing according to the annual report:
“In accordance with Dutch tax law, CPPI CV is considered transparent for Dutch tax purposes and is therefore not subject to Dutch corporate tax or dividend withholding tax,” the report states.
The company says in a response to FTM that Pfizer does business in more than 150 countries around the world. “At all times, and wherever we operate, Pfizer complies with all accounting and tax laws and pays all taxes due.”
Do you think the Netherlands should continue to act as a tax haven for companies? Tell us your thoughts in the comments below!
Feature Image: US DoD/Lisa Ferdinando/Flickr/CC2.0
What company in the world would ever not want to try to mitigate their tax obligation as long as itās legal? There is none. Every person that pay taxes tries to make their tax obligation as low as they can.
Companies use the system that govts allow. It is govts all over the world that should stop tax havens.