Settlement of tax bill boosts AstraZeneca

The pharmaceutical firm said it would pay £689m as a result of an agreement between UK and US tax authorities – less than it had set aside to cover the matter.

Astra said its tax rate for 2011 was now expected to be around 21 per cent against the 27 per cent previously expected – allowing it to increase one of its core earnings targets for the year.

An additional agreement was made in relation to the integration of its US businesses in 2000 after the merger of Sweden’s Astra and UK firm Zeneca in 1999.

Astra will release some of the charges it had set aside to cover the tax issue in its first quarter, which will lift earnings by around £313m in the period.

Savvas Neophytou, an analyst at Panmure Gordon, said the news “removes a significant overhang and tidies up another liability” for AstraZeneca. It also comes at a welcome time for AstraZeneca, which is battling against increased competition from cheaper rivals.

The group, which employs around 11,000 staff in the UK, recently posted a two per cent rise in annual profits to £8.1m, but warned of a challenging few years ahead for the industry.

Astra has operations across the UK at sites including Macclesfield and Wilmslow in Cheshire.