Takeda Announces the Conclusion of the Mutual Agreement Procedure Relating to the Correction Notice on Transfer Pricing and Recommencement of the Reinvestigation Process
Osaka, Japan, November 4, 2011 – Takeda Pharmaceutical Company Limited (“Takeda”) announced today that it received a notice from the National Tax Agency of Japan that the Mutual Agreement Procedure (“MAP”) concerning the transactions related to Prevacid, a drug for the treatment of peptic ulcers, between Takeda and TAP Pharmaceutical Products Inc.*1 (“TAP”) did not result in an agreement with the Internal Revenue Service of the U.S. and that the case has now been closed. Takeda had applied for the MAP in July 2008 for the purpose of the elimination of the double taxation, in relation to the Osaka Regional Tax Bureau’s (“ORTB”) Correction Notice*2 on the transfer pricing relating to the Prevacid transactions.
Hereafter, Takeda will approach the ORTB to re-start the reinvestigation process*3, which had previously been placed on hold in order to apply for the MAP, and will assert again the legitimacy of the Takeda position to the ORTB.
*1 TAP had been a fifty-fifty joint venture between Abbott Laboratories and Takeda America Holdings, Inc. (“TAH”), a wholly owned subsidiary of Takeda located in New York. As a result of the dissolution of the TAP joint venture in April 2008, in June 2008, TAP was merged into Takeda Pharmaceuticals North America, Inc. (“TPNA”), a 100% subsidiary of TAH located in Illinois.
*2 Takeda received the Correction Notice from the ORTB based on their conclusion that the profits earned in the U.S. market in relation to product supply and license transactions of Prevacid between Takeda and TAP were under-allocated to Takeda over the six-year period from the fiscal year ending March 2000 through the fiscal year ending March 2005. Total taxable income assessed was ¥122.3 billion and additional tax due, including local tax, was ¥57.1 billion. Takeda paid these additional taxes as of July 2006.
*3 In response to the Correction Notice, Takeda filed a request for reinvestigation with the ORTB in August 2006. However, this process was placed on hold in July 2008 in order to apply for the MAP.
Posted: November 2011