A Public Accounts Committee (PAC) investigation into tax affairs found that despite a turnover of £1.8bn on its UK sales last year the company reported operating losses – allowing it to avoid paying corporation tax.
A statement by Pfizer said the company “complies with the appropriate rules and regulations” in the UK and in all other countries it operates within.
Globally the company made $12.7bn last year. In the UK, it has offices in Surrey, Maidenhead and Berkshire. It also has manufacturing and distributing plants in Hampshire, as well as an R&D centre in Cambridge and Kent. It is one of the major suppliers to the NHS and has the best selling drug on the UK market in Lipitor.
But the company said it made operating losses of £46m in 2010 and of £59m last year. “Due to a number of factors including the level of investment Pfizer makes into the UK and restructuring costs, Pfizer actually generated losses in the UK in 2011,” a spokesperson said. “Under UK tax law, corporation tax is calculated on profits not turnover.”
Pfizer has previously been quizzed over its tax affairs in the US and in Germany. Regulators in the US wrote to the company earlier this year asking how it recorded profits overseas yet losses in America when 40% of its sales were in the States.
Critics have pointed towards similar operating losses by other multi-national organisations that allow them to legally avoid paying tax by paying in high tax jurisdictions, whilst reporting profits in low tax ‘havens’.
Charlie Elphicke, a former tax lawyer and now a Conservative MP, called for HMRC to be more firm in its approach to tax-avoiding companies. “What concerns me is that you have a company like Pfizer which has such a large presence in the UK not paying any tax at all,” he said. “That raises serious questions. We need to have an aggressive approach to tax like they have in America where those that evade taxes are prosecuted and those that avoid it face heavy scrutiny.”