UK and US tax authorities have agreed a settlement over AstraZeneca’s tax affairs that will boost the pharmaceutical giant’s 2011 earnings per share, it has said today.
The settlement of matters dating back more than a decade will see the company pay a net amount of $1.1 billion in 2011 to resolve all US transfer pricing issues – significantly less than it had set aside in provisions.
As a result, the effective tax rate this year will be some six percentage points lower than thought, at around 21 per cent, and AstraZeneca now expects 2011 core earnings to be between $6.90 (£4.30) and $7.20 per share, up from the $6.45-$6.75 range indicated previously.
The news is a fillip to the company's profit line at a time when it faces increasing challenges to some of its top-selling drugs from generic competition.
Shares in AstraZeneca were expected to open higher on the news, traders said.
City A.M. Reporter