Lilly rejects reports US tax plan prompted Ireland investment rethink
In October, Eli Lilly sought permission from County Cork Council to construct a three-story facility housing an additional production line at its site in Kinsale.
But over the weekend, Ireland’s Business Post reported that the plan had been put on hold.
The paper suggested Lilly was waiting to see if proposed changes to US tax laws will make pharmaceutical imports more expensive.
US tax reform proposals
Republican members of the US House of Representatives proposed “destination based” changes to the US tax system in June last year.
One of the proposals is that the revenue US companies generate by selling goods and services overseas is not taxed.
Another proposal is that the money US firms spend on goods and services from suppliers based outside the country is also ignored by the tax system, in other words the company cannot claim the expenditure as a deductible expense.
As a result, when a US firm buys anything from outside the country it effectively pays more than a company that buys from a US supplier because it cannot deduct the expense.
Wrong end of the stick
US taxation has been a hot topic since US President Donald Trump said he wanted to encourage US manufacturing last month.
But the suggestion possible US tax changes prompted Lilly to delay its decision was rejected by spokesperson Louisa Stevenson who told us the media was “getting the wrong end of the stick."
She said the stories were prompted by a statement Lilly sent to the Irish media on Friday, which stated that: “We have not made a final decision to proceed at this time and this decision will be made by Lilly’s global Board at the appropriate stage of the process."
Stevenson said reports the investment had halted in response to the proposed changes were the result of “people writing what they want to write.”
She also questioned the suggestion Lilly had planned to invest $200m (€212m), explaining the firm “would never give out a figure before a decision to invest is made.”
Stevenson did tell us the plant over $2bn has been pumped into the site since it began making pharmaceuticals in 1981, with heavy investment over the past few years to support Lilly’s biopharmaceutical pipeline.