Mylan cut its tax rate into the single digits by investing in coal: Reuters
by Eric Palmer | Jun 21, 2017 10:06am
Robert Coury
A day ahead of a challenge by investors to Mylan's board over the $97 million paid to Chairman Robert Coury, Reuters has disclosed that the company has quietly reduced its tax rate in recent years by investing in refined coal processing.
Mylan, which has a low tax rate by virtue of moving its base to the Netherlands in 2015, has found a way to cut it into the single digits: 4% in 2014 and even winning a $358 million benefit last year. The company invests in refined coal plants.
An extensive review of the company’s financial filings by Reuters found that since 2011, the drugmaker has owned plants that process coal to reduce smog-causing emissions, winning clean energy and research credits that lower its tax bill and boost its earnings. It utilized $95 million worth of the credits in 2014, and $100 million worth of the credits in both 2015 and 2016.
The Reuters review found that Mylan, which has drawn public and political fallout from the pricing of its top-selling EpiPen, is the only drugmaker using the strategy based on the credits approved by Congress in 2004 and set to expire in 2022. While an acceptable tax benefit, the company has disclosed the investments and the tax credits only in the footnotes of its filings, Reuters reports, even though the benefits accounted for about 9% of its earnings last year.
“It does sound like they are being mindful of tax planning,” Lisa De Simone, professor of accounting at Stanford Graduate School of Business, told Reuters. “From the perspective of shareholder value, companies have all of the incentive in the world to try to reduce their tax payments, to increase net income and increase distributions to shareholders.”
Mylan spokeswoman Nina Devlin, who confirmed Reuters' tax rate calculations, pointed out that the tax credits are available to any company that wants to utilize them.
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