Amgen faces a big tax bill relating to its Puerto Rico operations.
Michael Vi/Dreamstime.com
Shares of biotech company Amgen fell in out-of-hours trading Thursday after it said that it owes more than $7 billion to the Internal Revenue Service.
While the company reported that it made a $1.5 billion profit on $6.2 billion in revenue in the first quarter, it also received notice this month from the IRS that it owes back taxes, plus interest and penalties.
The tax bill relates to a dispute with U.S. authorities over the company’s operations in Puerto Rico. The current fee is for the 2013-2015 tax period, and it had already been hit with a fee for 2010 to 2012.
Amgen (ticker: AMGN) says it will “vigorously contest the adjustments and penalties” and that the case will take several years to be resolved.
Shares fell more than 6% after the market closed. The IRS is also auditing Amgen taxes for 2016 through 2018.
Puerto Rico is a U.S. territory but is a foreign jurisdiction for tax purposes. Amgen’s effective tax rate last year was 12.1%, lower than the U.S. corporate tax rate of 21%, because of profits earned through operations in Puerto Rico.
The IRS’s “proposed adjustments would result in Amgen’s Puerto Rico subsidiary earning little or no profit from its operations despite the value of and risk associated with its contributions,” the company said.
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