Medtronic cuts estimated medical device tax impact in half

February 19, 2013 by MassDevice staff

Medtronic joins fellow medical device giants in forecasting lower 2013 medtech tax costs than previously anticipated.

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Medical device maker Medtronic (NYSE:MDT) this week became the latest in a string of medtech giants who have pared back their expectations of the impact of the 2.3% medical device sales tax.

Medtronic chief financial officer Gary Ellis told investors during a conference call this morning that the medical device tax will likely cost the company around $20-$25 million for the 2013 fiscal year, about half what the company had previously projected.

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The original $50 million estimate was calculated before the IRS released the final guidelines for the tax, Ellis said. The new rules protect medtech companies from paying the sales tax on existing inventories, meaning that there will be "a little bit of a slower ramp up on the device tax itself, just based on what the existing inventory levels that are out there for the various businesses," Ellis told investors.