Executives for Caterpillar
Inc will defend the company's offshore tax strategies at a U.S. Senate hearing
on Tuesday held by a panel known for shedding light on corporate tax avoidance.
In a 99-page report released
on Monday, the Senate the Permanent Subcommittee on Investigations said
Caterpillar avoided paying $2.4 billion in U.S. taxes from 2000 through 2012 by
moving profits from sales of replacement parts through a low-tax unit it set up
in Switzerland.
Democrat Senator Carl Levin,
chairman of the subcommittee and one of Capitol Hill's most dogged questioners,
said
on Monday Caterpillar set up the Swiss structure for no other reason than
to avoid U.S. taxes.
Caterpillar, the world's
largest mining and construction equipment maker, said on Monday the Swiss
structure is legal and is a standard business move for many multinational
companies.
"Caterpillar stands by
this structure," said Julie Lagacy, vice president of Caterpillar's
finance services division, according to prepared testimony released ahead of
the hearing.
Along with three Caterpillar
executives, representatives of Big Four accounting firm PricewaterhouseCoopers
LLP, which advised Caterpillar on the restructuring, are expected to testify.
"In the fantasy land
that is international tax law, tax lawyers waved a magic wand to make millions
of dollars in the U.S. taxes disappear," Levin said.
Levin's panel has previously
held hearings on corporate tax avoidance with executives from Apple Inc,
Hewlett-Packard Co and Microsoft Corp.
Reuters
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