Moderna vaccine profits channelled to tax havens

News

13 July 2021

Vaccine manufacturer Moderna is employing tax avoidance structures to shift its profits to Switzerland and the US state of Delaware, research by SOMO in cooperation with Wemos. The European Union ordered $10.3 billion worth of coronavirus vaccines from the pharmaceutical company, while the United States ordered vaccines worth $7.5 billion.

Moderna’s free ride

“Moderna’s profiting from the vaccine is outrageous,” says SOMO Researcher Vincent Kiezebrink. “As a society, we pay three times: we fund vaccine development research; we pay inflated prices to purchase those vaccines; and then Moderna uses tax structures to avoid corporate taxes.”

Tax route through Switzerland

A leaked contract between Moderna and the European Commission shows that the payments for the vaccines ordered by the EU are going to a recently established subsidiary of Moderna in Basel. Switzerland is notorious for its low tax rates and secret tax arrangements. Because of this secrecy, it is impossible to find out exactly how much tax Moderna pays in Switzerland.

Patents in Delaware

In addition, the patents for Moderna’s vaccine are registered in Delaware, a true patent paradise. Delaware does not tax income that comes from intangible assets, such as patents. Much of the profit made by Moderna is likely to be shifted to Delaware through royalty payments for the use of patents, where it will be taxed at a low rate.

Booming profit expectations

A total of 1.5 billion doses of the Moderna vaccine have been ordered for 2021 and 2022, with 460 million doses for the EU and 500 million for the US. This will cost the European Union $10.3 billion and de United States $7.5 billion. It is estimated that the company will generate some $18.4 billion in revenue from coronavirus vaccine sales in 2021 alone.

SOMO calculates that Moderna’s profit margin is 44 per cent per dose, generating some $8 billion in profits for 2021. Despite this high margin, the company has indicated that it expects to raise vaccine prices after the pandemic ends.