OTTAWA Oct 18 The Supreme Court of Canada ruled
on Thursday for GlaxoSmithKline Plc in a tax case on
whether the drug conglomerate inappropriately charged its
Canadian subsidiary high prices to avoid Canadian taxes.
The case dealt with the taxes of the GlaxoSmithKline's
subsidiary from 1990-93 but it was important as it marked the
first time Canada's top court dealt with the issue of transfer
pricing - prices charged among company affiliates.
The court ruled unanimously that it was appropriate for the
Canadian subsidiary to pay more for pharmaceutical ingredients
than a generic drug maker might pay, because of all the benefits
that flow under its license agreement with GlaxoSmithKline.
GlaxoSmithKline lost on one less important point, which is
that the case will now be sent back to the tax court to decide
exactly what a reasonable price would have been for the Canadian
subsidiary to have paid. But at least a reasonable price will be
seen as higher than what generic drugmakers would pay.
The name of the case is Her Majesty the Queen v.
GlaxoSmithKline Inc (33874)