3 ms·

So do they pay tax on those units sold in the US?

• charlesdm 10y ago
  They pay tax on the profit left, after all expenses have been deducted. Given there's a myriad of "loopholes" one can use (i.e. earning stripping through loans, certain consulting or production fees that flow to lower tax foreign entities, etc), that's probably not much.
  • gnicholas 10y ago
    The largest line-item is likely IP licensing or co-development fees. The US entity will pay large licensing fees to foreign entities for the right to sell EpiPens in the US. Despite being located elsewhere, the foreign entity will own these rights. As pointed out elsewhere, these "earnings stripping" techniques can substantially reduce the income of the domestic affiliate. It has to maintain "routine returns" for its contributions, but this is nothing compared to the IP profits that flow elsewhere. There are laws explicitly blessing these sort of arrangements (IRC § 482), but the IRS and corporate taxpayers argue endlessly about precisely how much value should flow where.