Inland Revenue says an Oxfam report claiming pharmaceutical companies in New Zealand are dodging tax by some $21 million completely misrepresents the situation here.

And a tax expert agrees, saying Oxfam's study is based on flawed methodology.

PWC's Geoff Nightingale told Larry Williams it's used global profit percentages and applied them to revenue in New Zealand - but drug companies don't have the same activities offshore as they do here.

"The other phenomenon we have here is we've got Pharmac, which is already driving down the margins as best it can on drugs through bulk purchasing and government purchasing."

Nightingale says New Zealand's done an enormous amount of work in the last few years tightening up on multi-nationals, and that kind of tax gap is pretty unlikely.

LISTEN TO GEOFF NIGHTINGALE TALK WITH LARRY WILLIAMS ABOVE