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Caterpillar raided in tax probe

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By Euronews
Caterpillar raided in tax probe

Dozens of US federal law enforcement officials have raided three facilities of the heavy machinery manufacturer Caterpillar.

Searches at locations in the state of Illinois – including the company’s headquarters – are believed to be part of an investigation by tax officials investigating its Swiss subsidiary.

The apparent escalation of the government’s tax dispute with Caterpillar comes amid the Trump administration’s promise to reform corporate taxes and design a system that encourages companies to keep jobs and profits within the United States.

Caterpillar revealed last month that it had been told it owed $2 billion (1.89 billion euros) more in taxes and penalties for the years from 2010 to 2012 because of profits accrued by its Swiss unit.

That followed a US Senate committee report that concluded Caterpillar had shifted billions in profits abroad.

The company has said it will “vigorously contest” the tax bill.

Investors reacted with a sell off of Caterpillar’s shares on Thursday, though they regained some of those losses on Friday.

Falling sales

Caterpillar reported sales fell 18 percent in 2016 to $38.5 billion and since late 2015 it has reduced its workforce by more than 16,000 employees and consolidated or closed 30 facilities. Caterpillar cut 12,300 jobs in 2016, including 7,700 in the United States.

It said it was considering closing two more major production facilities, including one in Aurora, Illinois, and also announced it was moving its corporate headquarters from Peoria to Chicago this year.

Pence praise

Last week in Missouri, US Vice President Mike Pence toured Fabick CAT, a family-owned company that is one of the largest US distributors of Caterpillar equipment. “You are the strength in the American economy, and you’re going to lead an American comeback,” he told workers there.

Pence said the Trump administration wants to simplify the US tax code. “I’ll guarantee there isn’t anyone here who can make sense of America’s tax code, including me. There’s an old joke that says the tax code is about 10 times the size of the Bible but with none of the good news,” he said.

“Our country’s tax system these days penalises success. It makes it far too hard for hardworking people and small businesses to achieve the American Dream.”