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Tommy Hilfiger announces resolution of USAO probe

11 Aug '05

6 min read

A famous sportswear designing company Tommy Hilfiger Corporation announced it has resolved the previously announced investigation by the US Attorney's Office for the Southern District of New York by executing a non-prosecution agreement with the US Attorney's Office ("USAO").

The USAO has concluded that criminal tax charges are not warranted in connection with the buying office commission rate paid by the Company's US subsidiaries for the fiscal years 1990-2004, and will close its investigation.

In addition, the USAO has agreed that it will not criminally prosecute Tommy Hilfiger USA Inc ("THUSA"), or its parent or affiliates for any offenses relating to underpayment of Hong Kong taxes as a result of activities attributed to Tommy Hilfiger (Eastern Hemisphere) Limited ("THEH").

The non-prosecution agreement with the USAO is subject to certain understandings, including that THUSA will file amended U.S. federal income tax returns for the fiscal years ending March 31, 2001 through 2004 reflecting a reduced buying office commission rate for those four years, adopt and implement the recommendations of the Special Committee of the Company's Board of Directors, adopt and implement an effective ethics and compliance program, and provide information to the Hong Kong Inland Revenue Department ("IRD") for it to evaluate whether THEH or its Hong Kong subsidiary owe any Hong Kong taxes to the IRD. THUSA also agreed for a period of three years to provide the USAO, upon request, with information so that the USAO can monitor THUSA's compliance with the agreement.

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