VILNIUS
- International pharmaceutical
companies operating in
Lithuania have become
involved in a dispute with the
State Tax Inspectorate after the
latter accused them of tax evasion
and demanded they pay up.
The controversy stems from an
audit of the activities, since 2005,
of several pharmaceutical companies
operating in the country. The
audit concluded that some
Lithuanian branches of international
pharmaceutical dealers,
whose activities are purportedly
limited to marketing, were in fact
engaged in trading activities, and
therefore should be taxed on products
sold.
"According to the findings of
the STI audit, activity of some
undertakings in Lithuania is not
limited to marketing functions
alone, i.e. the collected data shows
that in fact, trading activity is also
in place," Mr. Darius Alinskas,
Deputy Head of State Tax
Inspectorate, told The Baltic
Times.
"During the tax audit, evaded
taxes shall be estimated and sanctions
anticipated in tax laws shall
be applied, i.e. surcharges for late
payment and respective fines.
Although, we would like to underline
that the key objective of the
Lithuanian Tax Administration is
to stop tax evasion and future utilization
of operational models
designed for the purpose of tax
evasion," he said.
While the STI is not allowed to
comment on which specific companies
it says were involved, the
marketing branches of Eli Lilly,
Pfizer and AstraZeneca have come
forward to say that they would
fight the STI's demands that they
pay.
"We know we can defend our
case. They [tax authorities] have
the wrong address. We are good
corporate citizens and will continue
this way," said Pfizer's
Luxembourg General Manager
Raimundas Voihska.
Voishka said that the STI was
attempting to tax the companies'
Lithuanian branch based on sales
invoiced by their parent company
in Belgium.
Eli Lilly, Pfizer and
AstraZeneca branches say they
are exempt from the sales tax
because they're not involved in
the sales, only in marketing the
products.
"It's totally nonsense," he said.
"Which law have we broken?"
"They [tax authorities and the
government] want to show power
and repatriate money. They
believe at this rate, they can
reduce prices in the pharmaceutical
market," he added.
General Director for
Lithuania's AstraZeneca branch
Saulius Sabunas also disagrees
with the tax authorities' assessment
of the situation.
"We don't sell medicines, we
sell ideas," as he was quoted on
LRT's Web site.
Lithuanian media has estimated
the overall amount of taxes the state
could be losing each year from tax
evasion by the pharmaceutical
industry at 100 million litas (29 million
euros).
Alinskas, however, puts the figure
at about half that.
"Following calculations, we can
make a conclusion that branches of
foreign pharmaceutical undertakings
's while concealing their factual
trading activity 's could have evaded
up to 50 million of tax per year," he
said.
