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AZ reaches agreement over transfer pricing

AZ has settled a long-running transfer pricing issue with HMRC in an agreement worth £505m

AstraZeneca (AZ) has settled a long-running transfer pricing issue with HM Revenue & Customs (HMRC) in the UK. Under the agreement, AZ will pay £505m to HMRC to resolve all its claims relating to this issue from 1996 to the end of 2010.

The payment will be made by a first instalment of £350m in March 2010, and a second final instalment of £155m in March 2011. As a result of this agreement, the joint referral of this issue to the UK Tax Court, will be withdrawn.

The settlement also resolves other outstanding UK tax matters such as AZ's complex transfer price considerations that have taken many years to resolve. As a consequence of the settlement of this issue and other tax matters, AZ will release part of its provision to earnings. 

In addition, the group tax rate for 2010 will be approximately two percentage points lower than previous guidance. AZ has increased its 2010 target for core earnings from $5.75-$6.15 per share to $5.90-$6.30 per share to reflect this lower expected tax rate.

23rd February 2010

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