In creating strategies to address many of today’s business
issues, companies often overlook tax considerations. We examine these
industry activities with tax in mind, and respond with tailored ideas
that can have a bottom-line impact on your business. R&D
, Transfer
Pricing
Maximising R&D
In a time of rising development costs and declining pipeline
productivity, the critical work of research and development (R&D)
organisations is the lifeblood of the industry. However, R&D credit
and incentive schemes in various national and local jurisdictions often
impose stringent requirements for R&D-intensive companies, and
calculating and defending these credits is a significant part of their
overall tax strategy. PwC works with pharmaceutical and life sciences
companies to:
- Increase sustainable R&D credit while providing
documentation for the credit;
- Identify and analyse areas of qualifying activities,
accumulate costs, produce documentation, summarise the findings and
manage the IRS process; and
- Increase cash flow, improve procedures for tracking and
managing future research costs and realise permanent tax savings.
Related link:
Tax
M&A
Acquisition structuring
In an industry where strategic alliances are essential,
PricewaterhouseCoopers help companies develop sound business practices
to maximise cash flows from these arrangements. We work with clients to
use their transactions to reach their business goals. We help clients
assess the impact of regulatory changes, screen acquisition or alliance
candidates, prepare for divestitures, and uncover hidden opportunities,
risks and deal issues, whether the objective is to diversify, enter new
markets, reduce costs, exit businesses, or raise capital. Most commonly,
we work with clients to:
- Perform due diligence analysis of the tax attributes of
potential domestic and international targets to determine historical
exposures, recommend tax-efficient acquisition structures, assist in
post-acquisition tax planning and recommend appropriate accounting
methods.
- Analyse third party arrangements to identify proper
characterisation of intangible acquisitions and increase use of the
research tax credit.
- Reduce structural rates with debt push-down strategies and
foreign tax credits.
Managing human capital
The pharma business is a knowledge and experience business, and the
knowledge and passion of its people have always been one of the most
important resources for any pharmaceutical company.
PricewaterhouseCoopers' Human Resource Services practice was developed
to provide organisations with access to a full range of services, from
HR planning and strategy through to the details of tax efficient reward
or advice on employment law. We can advise on:
- Structuring rewards and incentive plans for senior executives
- Regulatory risk in the locations where your global workforce
is deployed
- Tax- efficient international assignment structures and
policies
- Savings sought in the areas of tax, social security/pension
and expatriate policy.
Related links:
Human Resource
Services (HRS) or
International
Assignments
Transfer pricing
Transfer pricing is a critical element in the tax strategy of global
pharmaceutical companies. Today, inter-company transactions across
borders are growing rapidly and are becoming much more complex, and
compliance with the differing requirements of multiple overlapping tax
jurisdictions is a complicated and time-consuming task. At the same
time, tax authorities from each country are imposing stricter penalties,
new documentation requirements, increased information exchange and
increased audit/inspection activity. PwC helps businesses allocate
functions, risks, and tangible and intangible assets among affiliated
groups in order to create efficient tax structures. Examples of such
strategies include:
- Developing approaches to evaluate potential R&D,
marketing, and manufacturing intangibles, including innovative
comparability adjustments to the potential comparables
- Creating defensible models for companies to migrate product
intangible property into affiliates in tax advantaged locations and
with sufficient substance to manage the intangible property
- Developing models to support sustainable contract research and
development, marketing and other “high value” services transactions
- Developing approaches that use the client’s collaboration,
cooperation or other arrangements with third parties in order to
address integration, collaboration or other cooperative intercompany
ventures.
Related link:
Transfer
Pricing or
Transfer
Pricing Perspectives
Compliance
Expanding regulatory forces are driving pharmaceutical companies to
develop practical and effective solutions for meeting the challenges of
integrating governance, risk and compliance on a global level. Such an
integrated approach must properly address culture, process and
technology to address current and emerging requirements and performance
expectations, including:
- Depart compliance with Sarbanes-Oxley and IRS
requirements relative to disclosure, reconciliation of tax and
financial reporting, restated earnings and record retention.
- Determining uncertain tax positions
- Keeping up with IFRS
- Help multinationals improve their VAT compliance function
- Global or multi-territory regulatory and tax compliance
services
Related link:
Global
Compliance Services (GCS)
