The Australian Taxation Office (ATO) announced September 7 that it is conducting an in-depth review the tax and transfer pricing practices of the pharmaceutical industry to make sure that the correct amount of tax is being paid.
A team of senior officers has been tasked with conducing the review, the ATO said. The assessment covers related party financing, thin capitalization, intellectual property migration, consolidation, business restructures, research and development, and other tax risks.
The ATO said the transfer pricing practices of the Australian subsidiaries of pharmaceutical multinationals are being scrutinized in audits and reviews. The concern is that the industry’s transfer pricing practices do not accurately show the extent of the companies’ economic contribution and value creation in Australia, the ATO said.
The ATO also said it is negotiating advance pricing agreements with pharmaceutical firms.
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