Drug company Perrigo welcomes settlement of record tax bill

The chief executive of the Irish-headquartered drug company that agreed a settlement of a record tax bill with the Revenue Commissioners on Wednesday has welcomed the ending of the dispute.

Perrigo, which specialises in the sale of over-the-counter medications, agreed to pay €297 million to settle what had originally been a Revenue-assessed bill of €1.64 billion. That sum was reduced to €976 million earlier this year following clarification between the two sides.

Dispute

"We believe settling this tax dispute with Irish Revenue is in the best interest of all of Perrigo's stakeholders as it removes a major uncertainty that has been a significant distraction to the company over the last three years," Murray Kessler said.

“While we continue to believe that our tax positions were correct and would ultimately have been confirmed through the tax appeal process, we recognise that this process was uncertain and could take many more years to complete.

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“With what was once a multibillion dollar uncertainty behind us, Perrigo can focus all of our efforts on delivering on our consumer self-care vision and long-term value,” Mr Kessler said.

Under the terms of the settlement, Perrigo will actually pay over just €266.1 million once certain taxes it has already paid and unused R&D credits are taken into account.

The bill makes no provision for any interest or penalties on the assessment which arose from a 2016 Revenue audit and was notified to the company in late 2018.

Perrigo said it expected to execute a formal settlement agreement with Revenue “in the coming days”. The payment will be made within seven days of that formal agreement.

Money

That means the money will be available to provide a little more room for manoeuvre for the Government ahead of the delivery of Budget 2022 on October 12th.

Perrigo said it had the cash on hand to meet the agreed tax settlement.

The disputed tax bill relates to the sale by Irish pharma company Elan of its intellectual property in multiple sclerosis drug Tysabri in 2013 to Biogen for an up-front payment of $3.25 billion and a share of future royalties. That sale took place months before Perrigo bought what was left of Elan.

The row centred on Revenue’s decision, following the 2016 audit, to characterise the sale of Tysabri as a capital transaction, subject to tax at 33 per cent. The company maintained that the cash received had been properly declared as trading income, taxable at 12.5 per cent under corporation tax.