How Gilead Sciences, Inc. Is Avoiding Billions In U.S. Tax?
Gilead Sciences, Inc. (NASDAQ:GILD) apparently knows how to line its tax-liabilities well. Considering that it sells one of the most expensive drugs in the world for treating a type of cancer, caused by Hepatits C, it’s liabilities in the form of taxes for the drug in the U.S. have been minimal.
Gilead Sciences, Inc has chosen to book its profits in many of the overseas markets it operates in and has therefore been successful in avoiding taxes. As each pill of Hepatitis C treatment Sovaldi is sold at nearly $1,000 per pill, the company has therefore avoided billions of dollars in tax in the U.S.
Gilead Sciences, via a SEC filing on Wednesday, reported income from foreign markets, before taxes as $8.2 billion for 2014.
As with most of the big-size pharmaceutical companies, Gilead Sciences, Inc. (NASDAQ:GILD), too has ensured that its tax payment is minimized by setting up registered offices in low-tax countries. GILD, through this set-up, then qualifies only for 5% taxes on the income of its foreign sources in the U.S.
Tax consultants in the U.S., like Robert Willens, remark that Gilead Sciences, Inc., by opting for a low-taxing country has been able to sustain ‘dramatic increase in income’ and leverage low tax payments in its operational country.
Gilead Sciences is just one of several U.S. companies which have over $2 trillion in profits overseas and are not liable to be taxed in the U.S., by inverted tax-planning. Federal government losses due to adroit tax-avoidance are to the tune of $100 billion each year. Other companies, with similar tax-planning, include huge profit-making companies – Pfizer Inc and Merck & Co as well as Bristol-Myers Squibb Co. SEC filings, the EAC of the named companies are to the tune of $24 billion each.
Gilead Sciences, Inc. (NASDAQ:GILD) however, has not officially commented on the filing. If Gilead chose to move the drug to the U.S., then its tax payment would be in the region of $5.5 billion, nearly 35.3% higher than its present 5% in foreign taxes it pays from profits made by overseas-filing.
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