Bermuda is on the list of offshore "tax havens" targeted for "shutdown" in a bill that was scheduled to be offered in the US Senate last night, said senior Senate aides.

In legislation that expands on a bill co-sponsored last year with then-Senator Barack Obama, Senator Carl Levin will propose a broad crackdown on tax avoidance schemes estimated to deprive the US government of more than $100 billion a year.

The bill comes just two days ahead of a Senate hearing where a senior UBS AG executive is due to testify about an investigation of the Swiss banking giant.

Since last year, three provisions have been added to the Senate bill. One would classify US-controlled foreign corporations as domestic for income tax purposes.

According to the wording of the proposed legislation, "US-controlled" would apply if "substantially all of the executive officers and senior management who exercise day-to-day responsibility for making decisions involving strategic, financial financial and operational policies of the corporation are located primarily in the US".

Bradley Kading, president of the Association of Bermuda Insurers and Reinsurers (ABIR), said last night: "Most companies that fit that description are already US taxpayers." He added that it was possible that some Bermuda companies could be affected, however.

Another added provision would close an offshore tax dividend loophole that lets people dodge payment of US taxes on US stock dividends, the aides said. That would make the shares of US-listed Island-based companies less attractive to investors. A third provision would expand tax reporting requirements for passive foreign investment corporations.

"Offshore tax haven and tax shelter abuses are undermining the integrity of our tax system," said Levin in a statement given to Reuters. "We cannot tolerate $100 billion in offshore tax abuses burning a hole through our budget each year. We can fight back against secrecy jurisdictions and shut down offshore tax abuses if we have the political will."

Companion legislation is expected to be introduced in the US House of Representatives, the aides said.

Both bills will face committee review and some political opposition. Bankers at UBS and other financial institutions have long been among the largest contributors to US politicians' campaigns.

Separately in Washington, Switzerland's justice minister met on yesterday with a senior US Justice Department official to discuss international finance issues. Wealthy Americans avoid more than $100 billion a year in taxes by hiding assets offshore, according to the Senate Permanent Subcommittee on Investigations chaired by Levin.

Among other provisions, the legislation being reintroduced by Levin, a Michigan Democrat, would make it easier for federal authorities to pursue possible tax evaders by putting more onus on them to show offshore shelters are legitimate.

Mark Branson, chief financial officer of UBS Global Wealth Management and Swiss Bank, is scheduled to be a witness at a subcommittee hearing tomorrow.

Swiss banks and their clients are closely watching US government probes of UBS and what they could mean for Switzerland's long history of banking secrecy.