UK and US reach agreement over tax matters

RNS Number : 7109D

AstraZeneca PLC

28 March 2011

 



UK AND US GOVERNMENTS REACH AGREEMENT OVER ASTRAZENECA TAX MATTERS

AstraZeneca has been informed that the UK and US governments' tax authorities have agreed to the terms of an Advance Pricing Agreement regarding transfer pricing arrangements for AstraZeneca's US business for the 13-year period from 2002 to the end of 2014. AstraZeneca has concurrently reached agreement with the US Tax Authorities on a related valuation matter arising on integration of its US businesses in 2000 following the global AstraZeneca merger in 1999.

Based on these agreements, AstraZeneca now expects to pay a net amount of $1.1 billion to resolve all US transfer pricing and related valuation matters for all periods from 2000 to the end of 2010. This net amount reflects expected US tax payments and updated estimates of corresponding tax refunds in other jurisdictions. The payments arising from these agreements are expected to be made during 2011.

As previously disclosed, AstraZeneca had provided in its accounts for the outcome of these issues, at the heart of which are complex transfer pricing considerations that have taken many years to resolve. As a consequence of the settlement of these matters, AstraZeneca will release a portion of the provision related to these matters resulting in a benefit to earnings in the first quarter of approximately $0.5 billion.  This release will reduce the net accrual for transfer pricing and other international tax contingencies of $2.3 billion disclosed in Note 25 to the Company's 2010 Financial Statements.

As a result of the Q1 provision release and the impact of this settlement on the tax rate in all four quarters of 2011, the group's effective tax rate for 2011 is expected to be approximately six percentage points lower than the previous guidance of 27 percent, at around 21 percent. AstraZeneca has increased its 2011 target for core earnings per share from $6.45-$6.75 to $6.90-$7.20 per share to reflect this revised guidance for the 2011 tax rate.

About AstraZeneca

AstraZeneca is a global, innovation-driven biopharmaceutical business with a primary focus on the discovery, development and commercialisation of prescription medicines for gastrointestinal, cardiovascular, neuroscience, respiratory and inflammation, oncology and infectious disease. AstraZeneca operates in over 100 countries and its innovative medicines are used by millions of patients worldwide. For more information please visit: www.astrazeneca.com

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28 March 2011           

 

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