Global pharmaceutical companies paid tax of just $85 million in Australia on revenues of more than $8 billion, including $3.5bn from taxpayer-subsidised drugs, Labor senator Sam Dastyari says.

“What is so extraordinary is that you’ve had companies that have been able to arrange their affairs to be able to drive down their revenue to such an extent that their taxable income is simply one per cent of the revenue that they have,” Senator Dastyari said.

Senator Dastyari addressed media during a break at a senate inquiry into corporate tax avoidance in Sydney that is hearing from nine of the biggest drug companies operating in Australia.

“The question before us today was ‘Is this a genuine representation of how profitable these companies have been?’,” Senator Dastyari said.

“The evidence is that they have done what they can to drive up their costs to make themselves as artificially unprofitable as possible in Australia and make themselves more profitable in other jurisdictions to avoid paying tax here.”

Senator Christine Milne, who is also on the senate committee conducting the inquiry, said Johnson and Johnson’s vice president of global taxation had given extraordinary evidence that the company had a profit formula that the Australian subsidiary was required to meet.

“Then they work out their tax affairs so that they move their profits offshore and they maximise their costs here,” Senator Milne told journalists.

“And the extraordinary thing is in the negotiation with the government on the pharmaceutical benefits scheme they ask what the market will bear in terms of the cost of those drugs but they don’t reveal what they actually pay for those drugs from their head office.

“People in the community are saying well look the government keeps coming after us to pay more tax – what about the big end of town?” Source: theaustralian.com.au