IRS notice on tax dispute
GlaxoSmithKline PLC
26 January 2005
Issued - Wednesday 26 January 2005, London - LSE Announcement
GSK Receives Notice From IRS On Tax Allocation Dispute For 1997-2000
As part of its long-running dispute with the US Internal Revenue Service (IRS),
GlaxoSmithKline (GSK) announced today that, as expected, the company has now
received a claim for additional taxes that the US government asserts legacy
company, Glaxo Wellcome owes for the years 1997-2000. GSK disagrees with this
tax claim, and the company believes that it has paid all the taxes owed to the
U.S. Government for these years.
This Notice of Deficiency for $1.9 billion (£1.0 billion) in tax, principally
relates to the allocation of taxes on profits for Glaxo heritage products
between the US and other countries. To the extent that the IRS is successful in
this claim, interest would be payable. GSK estimates the interest to date would
be approximately $700 million (£380 million), net of federal tax relief.
On January 7, 2004, GSK previously announced that the company had received a
Notice of Deficiency for $2.7 billion in tax for the years 1989-1996, and
estimated the interest charge for this claim would be approximately $2.5 billion
net of federal tax relief. In making the announcement GSK said that it expected
to receive a similar notice for the 1997-2000 period,
The company continues to believe, based on external professional advice, that it
has made adequate provision for tax liabilities which could arise from these tax
assessments. GSK also continues to believe that the profits reported by its US
subsidiaries for the period 1989-2000, on which it has paid taxes in the United
States, are more than sufficient to reflect the activities of its US operations.
There continues to be a wide difference of views between GSK and the IRS. GSK
considers that the additional tax claim by the IRS on Glaxo heritage products is
inconsistent with the treatment of other pharmaceutical companies, including GSK
legacy company SmithKline Beecham. GSK plans to contest this claim for
additional taxes.
Disagreements with and between revenue authorities as to tax allocations between
related companies in different tax jurisdictions are inevitable for a global
business such as GSK. The company attempted to resolve the dispute by referring
it to negotiations between the US and UK tax authorities. The company believes
these discussions collapsed when the UK supported the GSK position that no
additional taxes were due to the IRS.
The company will ask the US Tax Court to consolidate the 1997-2000 claim with
the case currently pending before the court for the 1989-1996 tax years. A
provisional date for the trial has been set for October 2006.
S M Bicknell,
Company Secretary
26 January 2005
*******
GlaxoSmithKline, one of the world's leading research-based pharmaceutical and
healthcare companies, is committed to improving the quality of human life by
enabling people to do more, feel better and live longer. For more information,
please visit the company's web site at gsk.com.
Cautionary statement regarding forward-looking statements
Under the safe harbor provisions of the US Private Securities Litigation Reform
Act of 1995, the company cautions investors that any forward-looking statements
or projections made by the company, including those made in this Announcement,
are subject to risks and uncertainties that may cause actual results to differ
materially from those projected. Factors that may affect the Group's operations
are described under 'Risk Factors' in the Operating and Financial Review and
Prospects in the company's Annual Report on Form 20-F for 2003.
Enquiries:
UK Media enquiries: Philip Thomson (020) 8047 5502
David Mawdsley (020) 8047 5502
Chris Hunter-Ward (020) 8047 5502
US Media enquiries: Nancy Pekarek (215) 751 7709
Mary Anne Rhyne (919) 483 2839
Patricia Seif (215) 751 7709
European Analyst/Investor enquiries: Duncan Learmouth (020) 8047 5540
Anita Kidgell (020) 8047 5542
US Analyst/ Investor enquiries: Frank Murdolo (215) 751 7002
Tom Curry (215) 751 5419
This information is provided by RNS
The company news service from the London Stock Exchange
Latest directors dealings
- 1 day ago Savannah Energy
- 1 day ago Buccaneer Energy PLC
- 1 day ago Savannah Energy
- 1 day ago Carclo
- 1 day ago Schroder Japan Growth Fund