The head of the U.S. Senate Finance Committee is seeking details from Bristol Myers Squibb (BMY) about a decade-old deal in which the company used offshore subsidiaries in Ireland allegedly to avoid paying as much as $1.4 billion in U.S. taxes on prescription drug sales.
The query is part of an ongoing investigation into tax practices by multi-national pharmaceutical companies and how tax loopholes allow these drug makers to avoid paying U.S. taxes. Last June, Sen. Ron Wyden (D-Ore.), who chairs the committee, accused AbbVie (ABBV) of shifting profits offshore and registering patents in low-tax jurisdictions to consistently avoid paying U.S. corporate income taxes.
In a Jan. 18 letter to Bristol Myers chief executive officer Giovani Caforio, Wyden asked about an alleged tax avoidance scheme in which the company moved intellectual property rights for several medicines to a newly created offshore subsidiary in Ireland. The goal was to shift untaxed gains and generate so-called amortization deductions there because Ireland has a lower corporate tax rate than the U.S.
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