Details

  • Service: Tax, Global Transfer Pricing Services
  • Type: Regulatory update
  • Date: 1/25/2012

Canada - Highlights of Supreme Court hearing in 'GlaxoSmithKline Inc.' transfer pricing case 

January 25: The Supreme Court of Canada recently heard one of the most important transfer pricing cases in Canada to date—The Queen v. GlaxoSmithKline Inc.

This transfer pricing case involves the determination of the price paid by a Canadian subsidiary (Glaxo Canada) of a pharmaceutical company to a related non-resident company for ranitidine (the key ingredient used in the manufacture of a brand-name prescription drug). Glaxo Canada was paying a price more than five times higher to buy the ranitidine from the Glaxo Group than it would have paid to buy the ranitidine from generic manufacturers.


A seven-member panel of the Supreme Court of Canada (SCC) heard this case. The SCC judges’ questions and comments during the January 13, 2012 hearing are worth highlighting, as they may provide some useful insights into the SCC’s views on transfer pricing. Tax professionals with the KPMG member firm in Canada attended the hearing, and based on their observations, have provided highlights of the Supreme Court’s proceedings and reactions.


To read a January 2012 report of the hearing, prepared by the KPMG member firm in Canada: GlaxoSmithKline Inc. Transfer Pricing Case — Exclusive Highlights of Supreme Court Hearing


It is difficult to predict which way the SCC will decide this case because the judges asked difficult and probing questions to counsel representing both the Canada Revenue Agency and the taxpayer.




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