Canadian Supreme Court decision on GlaxoSmithKline’s transfer pricing
International Tax Review is part of the Delinian Group, Delinian Limited, 4 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2024

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Canadian Supreme Court decision on GlaxoSmithKline’s transfer pricing

The Canadian Supreme Court (SC) has today delivered its first transfer pricing decision, in a case involving GlaxoSmithKline (GSK).

gsk150.jpg

The SC dismissedthe appeal by the Canada Revenue Agency (CRA) of a ruling by the Federal Court concerning the deductibility of the price paid by GSK Canada to a Swiss related-entity. The CRA said the payment was not reasonable in the circumstances and a reasonable payment would have been that paid by generic companies.

GSK Canada said the consideration of reasonableness should take into account the licence agreement between the GSK group of companies and GSK Canada, which agreed a 6% royalty should be paid to the GSK group on sales of drugs covered by the agreement.

The trial judge ignored this and ruled the price GSK Canada should have paid was the highest of that paid by generic companies. This was overruled by the Federal Court in July 2010.

It has taken the SC judges 10 months to come to a decision after the hearing on January 13.

The SC held that the determination of an arm’s-length price must be informed by relevant surrounding economic circumstances, including other transactions that may be related to the purchasing transaction.

The case will now return to the Tax Court of Canada for redetermination because the SC also dismissed GSK’s cross-appeal, which asked it to overturn the decision of the Federal Court of Appeal to remit the matter to the Tax Court.

How GSK’s Canada SC hearing unfolded

Canadian Supreme Court confirms GSK date

GlaxoSmithKline files its arguments to Supreme Court of Canada

Supreme Court of Canada accepts Glaxo case

Glaxo prevails in the Canadian Federal Court of Appeal

Glaxo Canada: the key issues

Glaxo Canada loses transfer pricing case

more across site & bottom lb ros

More from across our site

Despite the relief, Brazil’s government has also presented a bill which seeks to re-impose a tax burden on companies’ payroll, one local tax specialist told ITR
Jeremy Brown arrives at the firm after a near 16-year career with Deloitte
PwC could elect a woman into the senior leadership position for the first time; in other news, KPMG Australia has extended its CEO’s term
The Senate report into PwC’s scandal is titled ‘The cover up worsens the crime’
Law firms that are conscious of their role in society are more likely to win work, according to a survey of over 23,000 in-house professionals
The firm’s tax business generated a quarter of HLB’s overall revenues in 2023
While successful pillar two implementation will require collaboration across all units, a combination of internal and external tax advice is at the centre of the effort
Binance has also been accused of manipulating foreign exchange rates via currency speculation and rate-fixing
Six individuals should have raised questions over information they received but did not breach professional standards, according to the firm
The partnership of KPMG UK has installed Holt for a second term as CEO and senior partner; in other news, a Baker McKenzie partner has sued the IRS
Gift this article