26th Jan 2005 17:16
GlaxoSmithKline PLC26 January 2005 Issued - Wednesday 26 January 2005, London - LSE Announcement GSK Receives Notice From IRS On Tax Allocation Dispute For 1997-2000 As part of its long-running dispute with the US Internal Revenue Service (IRS),GlaxoSmithKline (GSK) announced today that, as expected, the company has nowreceived a claim for additional taxes that the US government asserts legacycompany, Glaxo Wellcome owes for the years 1997-2000. GSK disagrees with thistax claim, and the company believes that it has paid all the taxes owed to theU.S. Government for these years. This Notice of Deficiency for $1.9 billion (£1.0 billion) in tax, principallyrelates to the allocation of taxes on profits for Glaxo heritage productsbetween the US and other countries. To the extent that the IRS is successful inthis claim, interest would be payable. GSK estimates the interest to date wouldbe approximately $700 million (£380 million), net of federal tax relief. On January 7, 2004, GSK previously announced that the company had received aNotice of Deficiency for $2.7 billion in tax for the years 1989-1996, andestimated the interest charge for this claim would be approximately $2.5 billionnet of federal tax relief. In making the announcement GSK said that it expectedto receive a similar notice for the 1997-2000 period, The company continues to believe, based on external professional advice, that ithas made adequate provision for tax liabilities which could arise from these taxassessments. GSK also continues to believe that the profits reported by its USsubsidiaries for the period 1989-2000, on which it has paid taxes in the UnitedStates, are more than sufficient to reflect the activities of its US operations. There continues to be a wide difference of views between GSK and the IRS. GSKconsiders that the additional tax claim by the IRS on Glaxo heritage products isinconsistent with the treatment of other pharmaceutical companies, including GSKlegacy company SmithKline Beecham. GSK plans to contest this claim foradditional taxes. Disagreements with and between revenue authorities as to tax allocations betweenrelated companies in different tax jurisdictions are inevitable for a globalbusiness such as GSK. The company attempted to resolve the dispute by referringit to negotiations between the US and UK tax authorities. The company believesthese discussions collapsed when the UK supported the GSK position that noadditional taxes were due to the IRS. The company will ask the US Tax Court to consolidate the 1997-2000 claim withthe case currently pending before the court for the 1989-1996 tax years. Aprovisional date for the trial has been set for October 2006. S M Bicknell,Company Secretary 26 January 2005 ******* GlaxoSmithKline, one of the world's leading research-based pharmaceutical andhealthcare companies, is committed to improving the quality of human life byenabling people to do more, feel better and live longer. For more information,please visit the company's web site at gsk.com. Cautionary statement regarding forward-looking statements Under the safe harbor provisions of the US Private Securities Litigation ReformAct of 1995, the company cautions investors that any forward-looking statementsor projections made by the company, including those made in this Announcement,are subject to risks and uncertainties that may cause actual results to differmaterially from those projected. Factors that may affect the Group's operationsare described under 'Risk Factors' in the Operating and Financial Review andProspects in the company's Annual Report on Form 20-F for 2003. Enquiries: UK Media enquiries: Philip Thomson (020) 8047 5502 David Mawdsley (020) 8047 5502 Chris Hunter-Ward (020) 8047 5502 US Media enquiries: Nancy Pekarek (215) 751 7709 Mary Anne Rhyne (919) 483 2839 Patricia Seif (215) 751 7709 European Analyst/Investor enquiries: Duncan Learmouth (020) 8047 5540 Anita Kidgell (020) 8047 5542 US Analyst/ Investor enquiries: Frank Murdolo (215) 751 7002 Tom Curry (215) 751 5419 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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