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Moderna accused of parking vaccine profits in tax havens: Report
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Vaccine producer Moderna is setting up shop in Switzerland and the U.S. state of Delaware to avoid paying high taxes on vaccine sales, according to a Dutch nonprofit.

In a report released Tuesday, the Research on Multinational Corporations (SOMO) cited a leaked contract between the company and the European Commission, which “indicates that the company’s vaccine profits will end up in some of the world’s worst tax havens.”

The EU, which has ordered hundreds of millions of Moderna vaccine doses, pays the company’s Swiss subsidiary, Moderna Switzerland GmbH, based in Basel, Switzerland. The country offers tax rates as low as 13 percent for foreign companies.

Quote:“It will likely be impossible for the public to determine the exact profits Moderna Switzerland GmbH will make, nor to see whether the company’s effective tax rate is even close to Basel’s low 13% statutory corporate income tax rate,” the authors of the report wrote.

Another tax haven is Delaware, where the company holds 780 patents. Under state law, income from intangible assets such as patents isn't taxed.

Quote:“The company’s vaccine profits will end up in some of the world’s worst tax havens,” SOMO wrote.

The report called this practice a “triple whammy” — in addition to possibly paying little in taxes, the company has benefited from an infusion of public money to develop its vaccine, and then charged high prices.

Quote:“There is tangible economic injustice involved when taxpayers finance the development of a product, only to have it sold back to them at a hefty margin,” the report’s authors wrote. “The fact that resulting profits end up in tax havens, where they will almost certainly be taxed at a very low rate, if at all, compounds this injustice.”

The company has received millions in public funding, especially from the U.S. government. By December 2020, Moderna received around $4.1 billion from the U.S. Department of Health and Human Services, including $1 billion under the U.S. initiative "Warp Speed." The U.S. ordered $7.5 billion worth of Moderna's vaccines, paying around $15 a dose.

The EU has ordered more than $10 billion worth of Moderna’s vaccine, with an initial down payment of $360 million, at a price of $22.50 per dose. EU countries, which pay for vaccines out of their own budgets, got a $4.50 discount on the initial order due to that down payment.

The nonprofit Coalition for Epidemic Preparedness Innovations (CEPI) also offered support, giving the company a $900,000 grant in the early stages of the pandemic. The American company agreed to CEPI's “equitable access principles" of distributing its vaccine according to need and selling it at affordable prices.

Quote:"Despite accepting the grant with these conditions attached, Moderna has so far sold its vaccine primarily to the world’s wealthy countries and has failed to deliver any of its early production to CEPI," the authors wrote.

The company made a deal in May of this year to deliver 34 million doses this year to COVAX, a mechanism to provide vaccines to poorer countries, and another 466 million in 2022.

SOMO estimates Moderna will take home 44 percent of the revenue generated from vaccine sales, ultimately contributing $8 billion to the company’s projected $18.4 billion in revenue in 2021. However, the group also acknowledges a high degree of uncertainty in its projections, noting the lack of transparency over the company’s assets.

Quote:"Without access to Moderna Switzerland GmbH’s annual accounts for 2021 and the years to come, the company’s tax practice cannot be analysed," the authors wrote. "We are left merely with strong indications that Moderna will funnel its vaccine profits into a Swiss tax avoidance structure."

While Moderna makes drug substance in Switzerland, this fact doesn't "provide a convincing economic rationale for why Moderna should earn its European vaccine income in Switzerland," they added.

The vaccine is produced via subsidiary Lonza, which has its factory in Visp, in the Valais region of the country, as well as the Netherlands.

Quote:"Following tax justice logic, Moderna’s profits should accrue where its real economic activity to develop, produce and market its vaccines takes place," the authors wrote.



https://www.politico.eu/article/moderna-...ax-havens/
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