Andrew Leigh: By ensuring multinationals pay their fair share of tax, we can invest in Australia’s future

Pharmaceutical company AbbVie makes the world’s best-selling arthritis medication. It also specialises in causing pain for tax administrators. In 2020, the Chicago-headquartered company made 75% of its sales in the US, yet only 1% of its income was reported in the US for tax purposes.

How did AbbVie magically make their tax bill disappear? According to a recent Senate Finance Committee investigation, the pharmaceutical multinational has been holding a valuable array of patents, trademarks and other intellectual property rights in the zero-tax jurisdiction of Bermuda, where it has zero employees. AbbVie’s tax arrangements helped it dodge billions of dollars in taxes and pay an effective tax rate that was a fraction of that paid by the average working family.