British pharmaceutical group GlaxoSmithKline said today that it had settled a tax dispute with the US government at a cost of about $3.1 billion to GSK.
'GlaxoSmithKline announces that it has settled its transfer pricing tax dispute with the US Internal Revenue Service (IRS),' GSK said in a statement to the London Stock Exchange.
'This settlement resolves all the issues which were in dispute in this case. Under the agreement the final net cash cost to GSK will be approximately $3.1 billion which covers federal, state and local taxes, interest and also the benefit of tax relief on the payments made.'
The settlement covers the dispute for the period 1989-2000, which is due to go to trial in February 2007, and also covers the subsequent years 2001-2005, GSK added.
The British company noted that since it had already made provision for the dispute, the settlement would not have any significant impact on the company's reported earnings.
'GSK was confident of the strength of its position, but in view of the size of the potential financial exposure, as well as the continued level of resource being applied to the case, GSK concluded that it was in the best interests of its shareholders to reach this settlement, thereby removing the costs and uncertainty of future litigation,' the statement added.
