Caterpillar Challenger

Caterpillar settles US tax dispute

Caterpillar reached an agreement with the US Internal Revenue Service (IRS), resolving a years-long tax dispute without having to pay a penalty.

Caterpillar said in a statement to regulators that the company has settled a dispute over the taxation of profits made by Caterpillar’s Swiss subsidiary, Caterpillar SARL, from parts sales earned between 2007 and 2016. “We have been working with the authorities as we look at these issues and are pleased to have reached an agreement with the IRS,” a Caterpillar spokeswoman said.

U.S. senators concluded in 2014 that the company evaded $2.4 billion in U.S. taxes as part of a restructuring that transferred the bulk of profits from foreign parts sales to its Swiss division. Caterpillar management officials have previously argued that the company’s tax strategy was correct and that the company is cooperating with authorities as part of the investigation. As a result of the dispute, Caterpillar reported that the amount of the payment based on the settlement decision was within the amount of unaccounted taxes. Thus, the company will avoid additional costs.

Analysts assumed that the amount of penalties from the IRS for Caterpillar could exceed $ 2 billion.