A $2.3bn fine from the US Internal Revenue Service (IRS) for tax evasion will not impact finances and operations, said global equipment major Caterpillar, adding that the company has decided to contest the penalty.
The fine follows the IRS’s actions against Caterpillar last year, when it challenged the company’s tax filings from 2007 to 2012. US federal authorities also searched three of Cat’s facilities regarding an investigation on profits earned by the company’s Swiss parts subsidiary, Caterpillar SARL. A committee from the US Senate also concluded that the company had shifted profits abroad and deferred or avoided taxes.
In a recent filing of its 10-K report – an annual requirement of the US Securities and Exchange Commission – Caterpillar Inc. provided a summary of its financial performance for 2017, showing sales of $19.13bn for Caterpillar Construction Industries in 2017, compared with $15.61bn the year before. It put the increase down to higher sales volumes and favourable price realisation.
The filing also shows that sales in Asia/Pacific were higher as a result of an increase in end-user demand, primarily in China, stemming from increased building construction and infrastructure investment. Caterpillar said it expects China sales to be higher this year owing to continued building construction and infrastructure investment, with a strong first half and some tempering later in the year.
“We currently believe the ultimate disposition of this matter will not have a material adverse effect on our consolidated financial position, liquidity or results of operations,” Caterpillar added in the filing.