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Whelan pharmaceuticals: tax factors and global site selection

Using the case below, please help with the following questions:

What tax factors are relevant to Whelan Pharmaceuticlas in deciding where to manufacture Varex? Which country is favored in site selection?

What are the non tax factors?

Should the sourcing committee choose Ireland or continental Europe?

Where should Whelan manufacture Varex?

Case details: Whelan Pharmaceuticals: Tax Factors and Global Site Selection, by G. Peter Wilson; Jane Palley Katz.

Solution Preview

What tax factors are relevant to Whelan Pharmaceuticlas in deciding where to manufacture Varex? Which country is favored in site selection?

The tax factors relevant to Whelan pharmaceuticals in deciding where to manufacture include the tax rate, the income tax rate, the withholding tax rate on repatriation, the time span up to which the current tax advantages will be available

Ireland is the best choice on the basis of tax factors, European countries have a high tax rate, the Maryland facility would have to pay a full tax rate of 34% and Puerto Rico even though having an attractive tax rate is beset with uncertainties. That is if Puerto Rice is given the status of the state then all the benefits would vanish, besides, there is already a pile of $300 million waiting in Puerto Rico to be invested. This leaves Ireland as the best possible choice from the point of view of tax factors. Ireland has a low tax rate of 12% and the government has given a guarantee that the tax rate will remain till 2010.

What are the non tax factors?
The non tax factors are the use of capacity in Maryland. That funds are available for expansion at different facilities for instance there are funds sitting idle in Peurto Rico and in the Switzerland branch.. The quality and ...

Solution Summary

The Solution addresses tax and non-tax factors that would apply to the case of Whelan Pharmaceuticals in deciding their manufacturing options to produce Varex.

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