US border tax to hit Indian pharmas |
Domestic pharmaceutical companies may be impacted and could see a rough road ahead in the US, if it decides to implement the proposed border adjustment tax (BAT) under the plan to revamp corporate taxes. The new measure is aimed at boosting US manufacturing by taxing imports, while exempting US business export revenues from corporate taxation. Analysts said the border adjustment tax will be "detrimental" to domestic companies exporting to the US, and may erode the profitability by 17-46%, if the bill is passed in the present format. The Republicans plan to adjust taxes at the border, essentially subsidising exports and taxing imports, under the controversial corporate tax reform plan. India contributes around 30% of the overall volume of drugs consumed in the US, with generic companies, including Sun Pharma, Lupin and Glenmark, exporting around 40% of their overall sales. The passage of the proposed BAT is not certain, an analysis by BofA Merrill Lynch Global Research said, as it has been opposed by advocates of free trade, and previously by US President Donald Trump. The measure may lead to appreciation of the dollar, thus negating to a large extent any trade/balance of payment impact.
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