Swatch tax complaint dismissed

Swatch has denied using 'transfer pricing' to avoid taxes

US officials have dismissed claims of tax evasion levelled at watchmaker Swatch by two former employees.

The US Labor Department, which received a letter from the pair alleging tax evasion and discrimination, said the matter lay beyond its jurisdiction.

"These two were hired outside the US, and they worked outside the US," a spokesman said.

Swatch has denied any wrongdoing. The firm's shares rebounded on Monday after having slumped by 10% on Friday.

The share fall had had been triggered by press reports of the tax evasion allegations.

Price pressure

According to the press reports, Swatch had been accused of avoiding some $180m (£98m) in taxes and customs duties by manipulating the price charged for its goods as they passed through subsidiary firms.

Swatch has denied the allegations, saying its internal pricing procedures were designed merely to prevent importers from exploiting regional divergences in the price of Swatch products.

The company added that the claims had arisen from a "pure employment dispute".

The two former employees, believed to be based in the Far East, have until early September to appeal against the Department of Labor's dismissal of their case.

Zurich-based Swatch, the official timekeeper of the 2004 Olympic Games, owns a range of high-profile watch brands including Tissot and Omega.