AbbVie shifted profit overseas to cut taxes
2022.07.07 23:15
Drugmaker AbbVie Inc (NYSE:ABBV) generates most of its sales in the United States, while shifting most of its profits overseas in order to avoid U.S. taxes, an interim report from the Senate Finance Committee said on Thursday.
According to the Democratic staff report, more than 75% of Illinois-based AbbVie’s sales were made in the United States, while just 1% of its income was reported in its home country for tax purposes.
This has been a long term trend for the company. In 2018, Reuters laid out how AbbVie reported its income in lower tax jurisdictions, which was possible in part because the company parked the majority of the patents for its top-selling drug, the rheumatoid arthritis treatment Humira, in tax haven Bermuda.
The Senate Finance Committee report said that the profit shifting has resulted in “stunningly low effective tax rates” for the drugmaker in recent years: 8.7% in 2018, 8.6% in 2019 and 11.2% in 2020. The current U.S. corporate tax rate is 21%.
The report suggested reforms to the U.S. tax code to remedy the issue, including increasing taxes on certain income earned abroad and fixing loopholes that encourage offshoring.
AbbVie did not respond to a request for comment.
