GlaxoSmithKline, Europe's largest drugmaker, said today that US authorities wanted it to pay up to $5.2 billion in additional taxes and interest and the company would contest the claim.
The firm, formed from the merger of Glaxo Wellcome and SmithKline Beecham three years ago, said in a statement it had received a tax bill for $2.7 billion, which the US Revenue Service says is owed by Glaxo Wellcome for the years 1989 to 1996.
The company said it estimated the interest on the full claim to be around $2.5 billion, net of federal tax relief.
The claim follows a long-running dispute with the US tax authorities which had been flagged previously by GlaxoSmithKline (GSK) in its annual report.
"GSK considers that the additional tax claim... is inconsistent with the treatment of other pharmaceutical companies, including GSK legacy company SmithKline Beecham," the statement said.
"GSK plans to contest this claim for additional taxes by filing a petition in the US Tax Court, where a trial is not expected until sometime in 2005-2006," it added.
Glaxo said that it expected to receive an additional assessment from US authorities for the 1997-2000 period, as similar tax issues remained open.
Shares in the firm - which made a pre-tax profit of £6.52 billion in 2002 on sales of £21.21 billion - were 0.6 per cent down at £12.53 pounds off lows of 12.38.
A GSK spokesman said the firm was not required to pay the amount immediately and pointed out that the company had been making provisions for tax liabilities during the past few years.
He declined to reveal the extent of the provisions.
Before receiving this notice, the company said it had attempted to resolve the dispute by referring it to negotiations between the US and UK tax authorities.
GSK has sought protection from the US claims under a double-taxation agreement between London and Washington, arguing that the tax had already been paid in Britain.