Senate Finance Committee Probe Reveals How AbbVie Exploits Offshore Subsidiaries To Avoid Tax Bills

Zinger Key Points
  • The probe reveals how the 2017 Republican tax law’s international provisions rewarded large corporations that shift profits overseas.
  • The investigation signals a clear need to reform the international tax code.

Provisions in the 2017 Republican tax law allow AbbVie Inc ABBV to generate most of its sales in the U.S. while reporting virtually no income in the U.S. for tax purposes. 

Data obtained by the Committee shows that AbbVie reports virtually no income in the U.S. for tax purposes.

In 2020, over 75% of AbbVie’s sales were made to American consumers, yet only 1% of AbbVie’s income was reported in the U.S. for tax purposes. 

AbbVie’s ability to exploit subsidiaries in offshore tax havens to avoid paying billions of dollars in taxes on U.S. prescription drug sales signals a clear need to reform the international tax code.

The Democratic staff report details of how AbbVie Biotechnology Ltd., a Bermuda-based AbbVie subsidiary with no employees or significant operations in Bermuda, owns the U.S. intellectual property rights for Humira, one of the top-selling drugs globally. 

It manufactures Humira bulk drug substance and a fill-finish operation through a branch in low-tax Puerto Rico, considered foreign for U.S. tax purposes.

The Committee is conducting similar investigations on Merck & Co Inc MRK and Abbott Laboratories ABT.

Price Action: ABBV shares are down 0.48% at $151.80 during the premarket session on the last check Thursday.

Image by Okan Caliskan from Pixabay

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