Economy

Perrigo holds out prospect of cheer for Paschal Donohoe

Healthcare group edging closer to settling its outstanding €1.64 billion tax bill

Getting Perrigo’s debt resolved would give the Minister for Finance Pascal Donohoe a substantial windfall payment.

Thu May 13 2021 - 05:43

Paschal Donohoe will have been cheered by the news that consumer healthcare group Perrigo is edging closer to settling its outstanding €1.64 billion tax bill with the Irish Revenue Commissioners.

The outstanding tax would help narrow the deficit at the exchequer which has spending on Covid-related supports more than offset improving tax returns so far this year.

At the end of last month, spending was running €2.2 billion ahead of last year and around €800 million ahead of what had been expected when the budget was announced.

The Perrigo tax bill is part of €3.75 billion in outstanding tax assessments that were under appeal as of the end of 2019.

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Perrigo's debt, which accounts for close to 45 per cent of that total, has been outstanding since late-2018. It is the largest bill ever assessed by Ireland own tax officials and ranks second in total behind the €13 billion Apple assessment handed down by the European Commission.

Getting it resolved would give the Minister for Finance a substantial windfall payment. However, it may not be quite as generous as he was hoping.

US sources have been talking from a long way out about getting the case closed for as little as €160 - €240 million. That’s still a substantial amount of money but it amounts to just 10-15 per cent of the headline bill.

Perrigo said on Tuesday that it has submitted a formal settlement offer to Revenue. The size of that offer is not known but, as a starting position, it is likely to be a low-ball figure. Revenue, with their position backed by a conclusive High Court ruling, will be determined not to settle too cheaply.

And the statement to analysts by Perrigo CEO Murray Kessler on Tuesday that the issue might be resolved "in the coming year" suggests some tough negotiation lies ahead.

However, that figure, or something close to it, might allow both sides to claim some class of victory – a digestible sum for the company and, for Revenue and Ireland Inc, the satisfaction of resolution and the avoidance of of costs involve d in potentially years of legal proceedings.

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