UPDATE 2-Caterpillar defends taxes attacked by U.S. Senate Democrat
* Caterpillar Swiss deal was 'tax avoidance' -senator
* Swiss structure not challenged by IRS -Caterpillar (Recasts lede; adds Lagacy, Levin quotes and share price)
WASHINGTON, April 1 (Reuters) - Caterpillar Inc defended itself on Tuesday against accusations of offshore tax-dodging, telling a U.S. Senate panel that a low-tax unit the company set up years ago in Switzerland has not been challenged by U.S. tax authorities.
Executives from the world's largest maker of mining and construction equipment were hauled in front of the Senate Permanent Subcommittee on Investigations to answer to allegations made by the panel in a 99-page report.
Released on Monday, it said Caterpillar avoided paying $2.4 billion in U.S. taxes from 2000 through 2012 by moving profits from sales of replacement parts through the Swiss unit, a strategy sharply criticized by the panel's chairman.
Democratic Senator Carl Levin said the Swiss arrangement had no business purpose other than to dodge taxes. "The documents couldn't be clearer, it's a tax deal," Levin said at the hearing, the latest in a series on corporate tax avoidance.
Caterpillar executives said its tax strategies, related to a complex corporate restructuring that began in 1999, were legal and in the best interest of its shareholders.
"We remain convinced that the restructuring and subsequent transactions comply with the tax law," said Julie Lagacy, vice president of Caterpillar's finance services division.
The Internal Revenue Service thoroughly examined the Swiss structure, called "CSARL," but did not challenge its validity, Caterpillar said in a statement to Reuters.
"Caterpillar has not paid additional taxes to settle a dispute over the CSARL structure," the statement said.
The IRS declined to comment on Caterpillar's taxes.
Shares of Caterpillar rose 44 cents on Tuesday to close at $99.81, in line with broader stock market gains.
PWC EXECS APPEAR
Along with three Caterpillar executives, representatives of Big Four accounting firm PricewaterhouseCoopers LLP, defended the tax advice it gave Caterpillar on its Swiss deal.
The hearing marked the latest foray by Congress into corporate tax management issues, with Democrats largely scolding corporate managers and some Republicans coming to their aid.
Republican senators said at the hearing Caterpillar and other multinational companies should not be blamed for shifting profits abroad to avoid the 35-percent U.S. corporate tax rate.
"We've got the wrong people on trial here. The tax code needs to be on trial here," said Republican Rand Paul, a libertarian and potential 2016 White House contender.
Past subcommittee hearings have focused on the tax avoidance strategies of Apple Inc, Hewlett-Packard Co and Microsoft Corp. (Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh, Bernard Orr)
- Alumnus shot dead after wounding three at Florida State University |
- Pope to raffle gifts given to him to raise money for the poor
- Naked outdoor protest over SeaWorld float in NY's Thanksgiving parade
- Exclusive: U.S. to allow people from nations hit by Ebola to stay temporarily
- Banking culture breeds dishonesty, scientific study finds