Business

CAIRO — Egypt, grappling with an energy crunch, will enforce a ban on the production and import of air conditioners that can be set lower than 20oC, aiming to reassure citizens and industry hit with power cuts and fuel shortages.

The failure of successive governments in Cairo to develop sound energy policies has discouraged foreign companies from tapping gas reserves needed to meet increasing consumption in the most populous Arab country.

Power generation in Egypt is largely dependent on natural gas, now in short supply. The government predicts production will fail to meet surging domestic demand in the next fiscal year, starting in July.

Trade, Industry and Investment Minister Mounir Fakhry Abdel Nour cast the restrictions on air conditioners as a part of the government plan to cut energy use in order to ease the worsening crisis in the sector.

The decision was taken last year but will be implemented starting mid-June, Abdel Nour said in a statement.

The ban on air conditioners outside the government's specification will contribute to "easing the burden on Egyptian families," the minister added.

Egypt will hold presidential elections late next month, just before the hot summer months when air conditioners are cranked up, adding pressure to an already stretched electricity grid.

Chaos in the politically sensitive energy sector, currently kept afloat by petroleum product handouts from Gulf Arab countries, will be among the biggest challenges facing the country's next president.

Long lines at gas stations and power cuts fuelled popular anger against president Mohamed Morsi ahead of his ouster by the army last summer.

Experts say the energy crunch is worsening and will not be resolved until more gas production comes on-stream, which is dependent on Cairo encouraging large investments. Such long-term policy decisions have been put off repeatedly.

With daily power cuts darkening homes and businesses ahead of the summer, the government is keen to be seen as active in tackling the shortages, though some ministers have acknowledged the problem is insurmountable in the short term.

The electricity minister said on Saturday the government would not be able to prevent power cuts this summer.  

Separately, the planning minister said in an interview in Washington that Egypt plans to boost electricity prices for the richest 20 per cent of its citizens before the presidential elections at the end of May, as the country has “no time to waste” in starting reforms.

Ashraf Al Arabi, Egypt's minister of planning and international cooperation, this week said the decision on raising gasoline prices will be taken "very soon”, but declined to provide further details.

Arabi's sense of urgency suggested that for the first time in years, Egypt was on the same page with the International Monetary Fund (IMF), which has long urged the country to push through structural reforms, such as gradually reducing costly subsidies.

After the 2011 uprising that toppled Hosni Mubarak, already high energy subsidy costs ballooned to a fifth of state spending as the Egyptian pound plunged, making imports more expensive.

Egypt's finance minister said last month that spending on energy subsidies next year would be 10-12 per cent above the 130 billion Egyptian pounds ($19 billion) budgeted for, unless immediate reforms are made.

"This energy subsidy system is unsustainable; we cannot afford [for] this to continue," Al Arabi said on the sidelines of the IMF-World Bank meetings in Washington.

"We don't have time to waste. ... It's better for Egypt to start some of these measures at least before the presidential election, just to pave the way for the coming president, to make his life easier," he added.

Arabi declined to specify by how much electricity prices would rise, saying the issue was still under negotiation. He also emphasised the price hikes would be gradual, and could take three to five years to implement in full.

He said the government had agreed to allocate at least 15 per cent of its subsidy savings to social programmes and the poor.

"This will benefit the poor, because we will take this from the rich and reallocate it to the poor and social spending," he added. "So I believe we have a good story to tell to the Egyptian people."

Egypt sells many energy products at prices substantially below the cost of production. But one cash-strapped government after another has resisted attacking the wasteful system, fearful that raising fuel prices could spark unrest.

The previous government of Mohamed Morsi was already trying to cut spending to contain a ballooning budget deficit, and was in negotiations with the IMF for a loan programme that would have required Egypt to raise taxes and cut subsidies. But negotiations were never completed before Morsi was toppled last July.

Since then, Egypt has relied on billions of dollars in aid from the Gulf Arab states of Saudi Arabia, United Arab Emirates and Kuwait.

"What I think Egypt should do is use continued Gulf support to create a breathing space, so that reform can be gradual, and you're not forced into abrupt reforms by running out of money," Christopher Jarvis, the IMF's mission chief for Egypt, said in an earlier briefing with reporters. "I think the sooner reform is started, the better. But I see it as a process that will take several years." Arabi said Egypt plans to raise gas prices "very soon", declining to elaborate further.

He said the government will make a bigger push to distribute smart cards for fuel, part of a programme to cut costs for the heavily subsidised commodity by reducing so-called "leakages," or smuggling and selling of gasoline on the black market.

The government in October said it would print five million smart cards to give to motorists, who would use them to buy gasoline and diesel at fuel stations, allowing the government to track and monitor deliveries.

A smart card company contracted for the project alleged earlier this month that the Egyptian government was taking too long to roll out the system.

Arabi said only two million or so cards have been distributed so far, and the government plans to distribute the remaining cards in the next two to three months.

"Once we have this smart card system, we will save at least 15 to 20 per cent on leakages in the system," he remarked.

Egypt on Sunday also said it plans to introduce a smart card system for subsidised bread by July.

Arabi said any of Egypt's presidential candidates would support moving forward on subsidy reforms and other changes to the economy.

"The Egyptian challenges are well known to everybody," he said. "We keep talking about these same problems, at least in the last 30 or 40 years. ... It's time to reform," he concluded.

AMMAN — Jordan Phosphate Mines Company (JPMC) and Agricultural Materials Traders and Producers Association (AMTPA) on Saturday studied signing a memorandum of understanding to organise selling fertilisers to AMTPA member factories at preferential prices, providing that the Ministry of Agriculture supervises the process. JPMC Chairman Amer Majali promised AMTPA to study the demands of liquid fertilisers plant owners as it corresponds with JPMC interests and the national industry. Majali said there should be more cooperation between JPMC and fertiliser plants regarding the needed quantities on condition that plants present their requests at the beginning of each year on a monthly basis. JPMC will provide plants with the material according to a plan that will be announced later upon the final signing of the memorandum. Agriculture Minister Akef Zu’bi stressed that the ministry will cooperate with both parties to serve farmers and agricultural materials producers. Head of AMTPA Mahmoud Tubeishi highlighted liquid fertilisers because of its importance in raising the added value of national fertiliser products and raising the value of exports to JD300 million annually. He noted that 30 plants are involved in these activities with 300 agricultural companies being relevant to its transactions, and employing around 3,500 people. 

AMMAN —  Jordanian Businessmen Association (JBA) President Hamdi Tabbaa discussed with a team from the Turkish Exporters Assembly on Sunday the arrangements for a Turkish economy delegation’s visit to the Kingdom on April 27. Tabbaa expressed hope that the visiting private sector delegation include investors to launch projects in Jordan and achieve tangible results in light of the successful work visit of His Majesty King Abdullah to Turkey in 2013 to enhance bilateral economic ties between the two countries. He also briefed the delegation on the investment climate in the Kingdom and the export advantages as products enter Arab and international markets customs free. 

KUWAIT CITY — The Kuwait National Petroleum Company (KNPC) on Sunday signed contracts worth $12 billion (nine billion euros) with three international consortia to upgrade two refineries and invited bids to build a new multi-billion-dollar refinery.

State-owned KNPC's chief Mohammed Al Mutairi signed the contracts with the three consortia led by Britain's Petrofac, US Fluor and Japan's JGC Corporation. Most of the other companies in the consortia are South Korean.

Mutairi said the project is due to be completed in early 2018.

The cost of the venture — called the Clean Fuel Project — is more than $13 billion if smaller preparatory contracts are added, lower than the previous estimated cost of $16.4 billion, project manager Abdullah Al Ajmi told AFP.

The contracts, the first mega-project in the Organisation of Petroleum Exporting Countries (OPEC) member's vital oil sector for 25 years, will upgrade two of the three existing refineries by installing 37 advanced processing units that will reduce sulphur and carbon pollutants, Mutairi told reporters.

The current production capacity of the two refineries of Mina Al Ahmadi and Mina Abdullah is around 730,000 barrels per day (bpd), while the capacity of Kuwait's third refinery at Shuaiba is 200,000 bpd.

At the end of the project, the capacity of the two refineries will increase to 800,000 bpd, while Kuwait plans to shut the third refinery.

KNPC on Sunday began inviting bids for two of the five-package project to build a state-of-the-art refinery with a capacity of 615,000 bpd, project manager Khaled Al Awadhi told reporters. The two tenders are for marine works and storage tanks.

Next month, the company will tender the three main packages for building the body of the refinery, said Awadhi, adding that KNPC hopes to award all the five contracts in the first quarter of next year.

The refinery, estimated to cost around $15 billion, is slated to come onstream in between the end of 2018 and the first quarter of 2019, Awadhi added.

Kuwait's refining capacity will reach over 1.4 million bpd from the current level of 930,000 bpd, when the projects are completed.

Most of the production will be for export to Asian and European markets, he remarked.

The two projects have been repeatedly delayed because of political disputes between parliament and the government.

The project to build a new refinery was scrapped by the government around five years ago, after five Japanese and South Korean companies were awarded contracts.

Lawmakers had opposed the plan complaining of a lack of transparency in the tendering process, but they have not raised objections to the new contracts.

Separately, Kuwait plans to raise its oil production capacity by 150,000 bpd to 3.4 million bpd by mid-2015.

"[Kuwait's] current production capacity is 3.25 million bpd. We plan to add another 150,000 bpd by mid-2015," said Hashim Hashim, the chief executive officer of Kuwait Oil Company (KOC), which is responsible for exploration and production.

The company also plans to add between 400,000 and 500,000 bpd to the country's production capacity to fulfil Kuwait's aim to raise output capacity to 4 million bpd by 2020, Hashim added on the sidelines of a recent global oil and gas conference.

He indicated that Kuwait currently pumps around 3 million bpd and could "increase production depending on market conditions".

According to Hashim, current oil prices of just over $100 (70 euros) a barrel are "fair".

Speaking during the conference, KOC acting manager for contracts Moomen Al Ghawas said the company has contracts under construction worth $35 billion.

AMMAN — The Jordan Society for Scientific Research held its first economic conference on Saturday with the participation of experts and officials to discuss means to address the budget deficit and indebtedness.

The event, titled “The Jordanian Economy in a Variable Year”, was held under the patronage of Prime Minister Abdullah Ensour, according to society President Anwar Battikhi.

He noted that the conference would provide a platform to examine the impact of internal and external debts on economic growth, in addition to issues related to the knowledge-based economy, investments, public expenditure and the Islamic banking system. 

ALGIERS — Long held in suspicion in a largely state-controlled economy, Algerian businessmen are pouring cash into President Abdel Aziz Bouteflika’s re-election campaign, hoping to benefit from an expected fourth term for the incumbent.

By law, candidates are supposed to spend no more than $764,000 (600,000 euros) on their campaign unless the election goes to a second-round run-off.

But analysts say the legal limit is set impossibly low for a country which is Africa’s largest by area, paving the way for effectively unrestricted spending by the candidates, with the incumbent leading the way.

Because the spending is technically illegal, no public record is kept of where the campaign funds come from.

But there is no shortage of businessmen eager to smooth the way for public contracts, or cut through Algeria’s notorious red tape to secure loans from state-owned banks or planning permission from local authorities.

According to economist M’Hamed Hamidouche, the legal spending limit would not even cover the costs of renting the campaign booths the rival candidates set up.

“In reality, the candidates receive significant donations in cash, the origins of which are difficult to establish. There are no checks,” Hamidouche said.

Bouteflika’s campaign spending alone runs to at least 75 million euros, Algerian press reports say.

A team of top aides, led by former prime minister Abdel Malek Sellal, have been separately criss-crossing the vast North African nation to make the controversial case for the incumbent’s re-election as the 77-year-old is too sick to campaign himself.

First and foremost among his campaign contributors are the many businessmen dependent on public sector contracts in an economy driven by state-controlled oil and gas receipts, Hamidouche says.

Prominent among them is Ali Haddad, who is often seen with the ageing president’s brother Said.

His ETRHB construction company has experienced meteoric success in the 15 years since Bouteflika came to power, securing state contracts worth an estimated $2.5 billion, according to the Algerian press.

Haddad, who already runs the pro-Bouteflika Dzair TV, has launched a new channel, Wiam, dedicated to covering the incumbent’s re-election campaign.

Since stepping down as premier in March, Bouteflika’s campaign chief Sellal has shuttled around the country in a plane chartered from state energy firm Sonatrach’s Tassili Airlines, accompanied by some 50 invited journalists.

The president’s main rival, Ali Benflis, who is seeking to oust Bouteflika at the second attempt after failing 10 years ago, has chartered an aircraft from state-owned carrier Air Algerie.

Businessmen
‘invited’ to donate

Businessmen in the services sector who have flourished during Bouteflika’s rule are another source of campaign funding, Hamidouche says. 

Mahieddine Tahkout was a humble fruit and vegetable trader but now owns a fleet of buses which operate under contract to the higher education ministry, and also holds the distribution licences for several Asian and European car manufacturers.

There are also many other businessmen who may not be seeking state contracts but who are still eager for support from the president’s entourage in navigating Algeria’s bureaucracy.

Algeria’s main employers’ organisation, the Forum of Business Leaders (FCE), voted at a special meeting in March to support Bouteflika’s re-election.

Several FCE members said they were “invited” to make pledges of between 5,000 euros and 500,000 euros to Bouteflika’s campaign, according to the news website Maghreb Emergent. 

One member, food business boss Slim Othmani, charged that “threats” were made to extract donations from reluctant contributors.

“I have to choose my words carefully when I talk about threats, because some of us are getting seriously worried,” he said in remarks that were later leaked.

Othmani quit the FCE shortly afterwards, complaining in his resignation letter that an employers’ organisation ought to show more self-respect than to shower an incumbent with displays of support.

Separately, the winner of energy-rich Algeria’s presidential election must tackle a major problem facing the country — its dependence on hydrocarbon revenues, which are used by the government to defuse social tensions and which are in decline.

Sporadic protests over poor living conditions came to a head in early 2011, as the popular uprising in neighbouring Tunisia toppled a decades old-dictatorship.

Bouteflika responded by hiking public spending, raising wages and initiating a reform programme.

But discontent remains a real threat in the years to come, experts say, with official jobless figure of 9.8 per cent hiding a burgeoning informal sector, much higher youth unemployment and many people holding precarious, often illegal jobs.

“Despite high levels of spending in 2011 and 2012, and additional wage increases in 2013, social demands remain elevated and could further increase,” the International Monetary Fund (IMF) said in a report in February.

And a special committee of former colonial power France’s National Assembly said in December that Algeria’s hydrocarbons sector employed just 3 per cent of the active population but generated 40 per cent of gross domestic product (GDP) and 97 per cent of export earnings. 

Since Bouteflika came to power in 1999, Algeria has reaped vast revenues as oil prices have risen, enabling it to pay off its debts, amass $200 billion (144 billion euros) in foreign reserves and plough $500 billion into social spending schemes.

“From 1999 to 2012, Algeria has earned more from its resources than in the 36 previous years. Hydrocarbons exports brought in $751 billion in 13 years,” economist Abderahmane Mebtoul pointed out.

But as the IMF warned that the windfall has brought problems of its own, creating vulnerability to price fluctuations and holding back Algeria’s fledgling non-energy sector. 

“The economy’s vulnerability to developments in the hydrocarbon sector is worsening. Declining hydrocarbon production and surging domestic consumption are squeezing export volumes, compounding the longstanding risk of lower oil prices,” it indicated.

Meanwhile, Algeria’s import bill reached almost $55 billion last year.

Growing pressure to diversify

Bouteflika has launched huge spending programmes under each of his three five-year terms. There was one of $155 billion between 2005 and 2009, and another $286 billion between 2010 and 2014, of which $130 billion was earmarked for completing unfinished projects.

But the results have been mixed, at best.

“Tangible results have been registered in the social sector because of these public redistribution policies and from job creation, with a significant decline in unemployment,” said economy expert Mustapha Mekideche.

But he also lamented the “extensive reliance on foreign capability, on the inexplicable extra costs and on the quality of work, which could have been better.” 

A glaring example of the problems associated with major state-controlled projects in Algeria is the 1,200 kilometre East-West highway, which has been dogged by allegations of corruption and extended delays. 

Launched in 2007, it was originally due to cost less than half the current estimate of $13 billion.

Another economist, Abde Latif Rebah, believes the “vulnerability and structural handicaps of the Algerian economy have got worse” and that the country’s dependence on energy exports has not changed, despite repeatedly announced plans to diversify.

“The share of industry in GDP has gone from 25 per cent to five per cent in 30 years,” he indicated.

The ruling elite is acutely aware of the need for structural change. 

Sellal said last year that boosting industry was the only way to “break out of this vicious circle of dependence on hydrocarbons,” create sustainable employment and drive healthy economic growth.

“Getting the economy on the path to reindustrialisation and reducing the power of the lobbies will be one of the key tasks awaiting the future president,” said Mekideche.

WASHINGTON — US Treasury Secretary Jacob Lew warned the eurozone this week to pay heed to the risk of deflation, adding pressure on European authorities and the European Central Bank (ECB) to boost growth.

"The risk of low demand and the risk of deflation is something they need to be very alert to," Lew said on CNBC television.

Lew added that countries running strong fiscal and trade surpluses should do more to increase demand, to help deficit countries.

"In Europe as a whole, the growth rate is very modest, the risk of deflation is something that has a lot of people concerned," he said. "There is a demand problem in the world and  there is a demand problem in Europe." 

"There are a number of countries that could do more, and Germany obviously is one of the surplus countries in Europe," he indicated.

He suggested that more investment in infrastructure could help boost demand, in turn countering the deflationary pressures from slow growth.

Lew's warning came a day after the International Monetary Fund's (IMF) chief economist Olivier Blanchard urged the ECB to act "soon" to counter extremely low inflation, which some economist worry could reverse the euro area's rebound.

Blanchard said the ECB had studied its options already, including setting negative interest rates and embarking on a US-like quantitative easing stimulus.

"I think they should all be looked at, and I know that the ECB is looking at them," he said of the bank's various choices. "And we hope that they will implement them as soon as they are technically ready to do so."

"Everything should be done to try to avoid" deflation, he added.

According to an upgraded IMF forecast, the eurozone economy is recovering towards 1.2 per cent growth this year.

Warning that recovery in the 18 eurozone members was struggling up a slippery slope, the IMF raised the outlook for this year from 1.0 per cent, and forecast 1.5 per cent growth next year and in the medium term.

Although the eurozone had "finally emerged from recession" after a contraction of 0.5 per cent last year, "downside risks dominate", the IMF said.

The legacy of the financial and debt crises in the form of high unemployment, debt and tight credit still had to be tackled, but the recovery is underpinned by reforms already enacted, it added.

However dangers abound, notably a "relatively high risk" of deflation, which could set the recovery back, the IMF warned in its spring economic forecasts.

Countries in difficulties because of budget deficits must push ahead with economic reforms, the IMF said.

WASHINGTON — Public company and bank audits conducted around the globe by units affiliated with the world's six largest accounting firms are persistently riddled with flaws, a group of international regulators have found.

The finding, released on Thursday in a survey by the International Forum of Independent Audit Regulators (IFIAR), raises major policy questions about whether enough has been done by global regulators to improve audit quality since the 2007-2009 financial crisis.

Leading up to the crisis, many publicly traded banks portrayed a rosy financial picture of their corporate books, only to later suffer massive losses on sub-prime mortgage securities in their portfolios.

Critics have questioned why independent auditors tasked with reviewing the accuracy and quality of public company financial reporting failed to spot the problems sooner.

"The high rate and severity of inspection deficiencies in critical aspects of the audit, and at some of the world's largest and systemically important financial institutions, is a wake-up call to firms and regulators alike," said Lewis Ferguson of the Public Company Accounting Oversight Board (PCAOB), the body that polices auditors in the United States.

"More must be done to improve the reliability of audit work performed globally on behalf of investors," he stressed.

The global survey on audit performance comes at the end of a three-day summit in Washington, DC, that included audit regulators from around the globe.

Together, those 50 regulators comprise the IFIAR — a coalition that was formed in 2006 to improve information-sharing and coordination.

The findings discussed in Thursday's survey stem primarily from inspections conducted at firms affiliated with the six largest accounting firms in 2013.

That includes the "Big Four" — PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young, as well as BDO and Grant Thornton.

The survey looked at inspection results for audits of public companies and large financial institutions considered "systemically important" to the global economy.

It also looked at how well internal quality controls fare at audit firms themselves.

With public company audits, regulators found problems related to auditing fair value measurements, internal control testing and procedures used to assess how financial statements are presented.

The regulators said that audits of systemically important financial firms often had deficiencies stemming from allowances for loan losses and loan impairments and the auditing of investment valuation.

In all of these examples, IFIAR indicated that auditors did not always obtain sufficient evidence to support their audit opinions.

As for audit firms, the regulators added that they routinely encountered problems with independence and ethics, among other things.

The survey is IFIAR's second. Last year, similar types of problems were flagged, though IFIAR says the survey itself does not provide an adequate basis to make a year-to-year comparison.

Regulators in the United States and Europe have been exploring ways to improve audit quality since the 2007-2009 financial crisis.

Last week, the European Union approved some of the world's toughest new rules for accountants, after auditors gave banks a clean bill of health before they were bailed out by taxpayers.

Those rules would prevent accounting firms from also auditing the books of a public company client for more than 20 years, a reform designed to bolster auditor independence and end cozy relationships between accountants and company management.

The PCAOB has given up exploring a similar reform in the United States, after major business groups and accounting firms lobbied fiercely against it.

However, the board is working towards completing other reforms. One plan would require auditors to tell investors more details about "critical audit matters" they encountered during a review of the company books.

Another plan calls for auditors to disclose the names of individual partners who work on company audits, in an effort to hold them more accountable. 

TOKYO — Toyota on Wednesday recalled 6.39 million vehicles globally over a string of problems, dealing another blow to the world's largest automaker whose reputation for quality and safety has been dented in recent years.

Despite record sales and bumper profits, Toyota has been fighting to protect its brand after earlier recalls involving millions of vehicles.

Last month, it reached a deal to pay $1.2 billion to settle US criminal charges that it covered up a sticky pedal blamed for dozens of deaths.

US rival General Motors has also been sideswiped by accusations that it hid a decade-long ignition and air bag problem linked to 13 deaths. 

There was no apparent link between GM's woes and an air bag issue that Toyota announced Wednesday as part of its broad recall.

Toyota shares were among the biggest losers in Tokyo, falling 3.07 per cent to 5,450 yen ($53) by the close.

The company issued five recalls involving 26 Toyota models, as well as the Pontiac Vibe and the Subaru Trezia, with some models affected by more than one recall. 

The Vibe, based on Toyota's Matrix model, was produced at a US factory which was jointly owned by the Japanese automaker and GM. The Trezia is a rebadged version of Toyota's Ractis subcompact. 

Toyota said "we sincerely apologise" for the recall, adding that it has "re-dedicated itself to strengthening its commitment to safety and quality". 

"In part, this means re-focusing on putting customers and people first, by listening better and taking appropriate action," the firm added.

Among the other problems are a driver's seat defect, steering column problems and an engine starter glitch that posed a fire risk.

Toyota said it had received two reports about fires due to the starter defect, but added that none of the issues had caused any accidents to its knowledge.

The affected vehicles include the Corolla sedan, the RAV4 sport utility vehicle and the Yaris subcompact.

The vehicles were made over the past decade. Toyota said the recall affects 1.08 million vehicles in Japan, 2.3 million in North America, about 770,000 in Europe and 62,000 in China, with the rest from other regions.

WASHINGTON — Foreign profits held overseas by US corporations to avoid taxes at home nearly doubled from 2008 to 2013 to top $2.1 trillion, according to a private research firm's report, prompting a call for reform by the Senate's top tax law writer.

"The new numbers... certainly highlight what is one of the key challenges for tax reform. I do think there need to be some reforms in this area," Senate Finance Committee Chairman Ron Wyden told reporters late Tuesday on Capitol Hill.

Under US law, corporations do not have to pay income tax on most of their overseas profits until they are brought into the United States. These earnings can be held offshore for years if they are classified as indefinitely invested abroad.

Research firm Audit Analytics pointed out in a report issued last week that the total of such earnings was up 93 per cent from 2008 to 2013, citing federal financial filings for companies listed in the Russell 1000 index of US corporations.

Conglomerate General Electric Co. (GE) had the biggest pile of earnings stored abroad, at $110 billion, the firm indicated.

Next were software maker Microsoft Corp., with $76.4 billion; drugmakers Pfizer Inc., with $69 billion, and Merck & Co. Inc., with $57.1 billion; and high-tech group Apple Inc., with $54.4 billion, it said.

In response, GE said in a statement: "GE operates in more than 170 countries, and most of these overseas earnings have been reinvested in active business operations like manufacturing facilities and loans to non-US customers."

A Merck spokesman said the company files its tax returns in accordance with all applicable laws and regulations.

A Microsoft spokesman referred questions to 2012 congressional testimony, in which company officials said it abides by foreign and US tax laws.

In testimony in 2013 before Congress, Apple Chief Executive Tim Cook said the company is a large taxpayer and does not use tax gimmicks. Apple declined to comment on the new report.

Pfizer was not immediately available for comment.

Baucus and Wyden

Congress has quarrelled for years over the law that lets multinationals stash profits abroad tax-free. Some favour killing the law, known as offshore corporate income tax deferral, and some back a one-time tax holiday that would let companies bring foreign profits home, or "repatriate" them, at a low tax rate.

Debate over offshore deferral flared again in November when Wyden's predecessor as finance committee chairman, former Democratic Senator Max Baucus, proposed doing both. Baucus resigned weeks later to become US ambassador to China.

Wyden in the past has called for repeal of offshore deferral, along with a repatriation holiday, among other changes to the tax code, which he last month called "a rotten carcass that the special interests feast on".

No decisive action is likely for now, however, with Congress deadlocked over fiscal issues at least until after the November mid-term congressional elections, according to policy analysts.

Next year, lawmakers are likely to mount another push to overhaul the tax code, a politically difficult feat that has not been accomplished since 1986, when Republican President Ronald Reagan and a divided Congress managed to get it done.

The top US corporate income tax rate is 35 per cent, though few multinationals pay anywhere near that thanks to tax reducing loopholes written into the code in the past 28 years, including some that have enabled wider use of offshore deferral.