Leading Wall Street banks have been using complex derivatives “gimmicks” to help hedge funds and other offshore clients avoid billions of dollars in taxes owed to the government, US congressional investigators say.

A 77-page report by the Senate permanent subcommittee on investigations, to be released on Thursday, says the strategies enabled investors to avoid paying the 30 per cent withholding tax on income by treating dividend payments as returns on so-called equity swaps, stock loans or other derivatives transactions.