Amgen Inc AMGN will fight Internal Revenue Service over the company’s international tax strategy and $10.7 billion in back taxes and penalties, Wall Street Journal reported.
The IRS agency says that Amgen underreported its taxable income by nearly $24 billion from 2010 to 2015 by inappropriately attributing its U.S. profits to a Puerto Rico subsidiary.
According to FactSet data, Amgen has long had one of the lowest tax rates in the pharmaceutical industry, reporting a median 12.5% effective tax rate over the past decade, compared with an 18% median rate across the ten largest U.S. drug companies.
“Our tax returns have always been compliant with the law and reflect our position that the appropriate allocation has not changed—our allocation of profit recognizes the key contributions made, the risks taken, and the significant equity value of our Puerto Rico subsidiary,” the spokeswoman said.
Investors have long admired Amgen’s low tax rate because it helped the company to beat analysts’ quarterly earnings estimates reliably, said Brian Skorney, a Robert W. Baird & Co. analyst.
Price Action: AMGN shares closed at $247.47 on Friday.
