US Treasury steps in for Apple, others in Europe's tax bid

25 Aug 2016


The US has been intensifying efforts to convince the EC to refrain from hitting Apple Inc and other companies with demands for possibly billions of euros in underpaid taxes.

In a white paper released yesterday, the Treasury Department in Washington said the Brussels-based commission was taking on the role of a ''supra-national tax authority'' that had the scope to threaten global tax reform deals.

''This shift in approach appears to expand the role of the commission's Directorate-General for Competition'' that goes ''beyond enforcement of competition and state aid law,'' the Treasury wrote in the paper.

''The cases cited by the commission do not give taxpayers prior notice that the commission would interpret its powers in this way or that selectivity would no longer be a meaningful precondition to a finding of state aid.''

Rules that barred EU states from giving tax benefits ''to selected companies that are not available to others'' had been ''in place for a long time,'' the commission said in an e-mailed statement. When such benefits had nonetheless been granted, ''the member state concerned must recover the unfair advantage.''

The commission had initiated investigations into tax rulings against Apple, Starbucks Corp, Inc and Fiat Chrysler Automobiles NV in separate EU nations.

Meanwhile, the EC has accused Apple of striking a sweetheart tax deal with Ireland, in which the iPhone maker would move its profits to wholly-owned Irish subsidiaries to cut its corporate taxes.

According to commentators, tax was one of the biggest and most touchy policy issues for Apple. Apple's tax arrangements had been investigated by Congress in 2013, which led to CEO Tim Cook testifying before the senate.

Apple held billions of dollars offshore that it would love to bring back to the US, but Cook said he thought the current system was unfair.

"It's important for everyone to understand that the allegation made in the EU is that Ireland gave us a special deal. Ireland denies that," Cook said.

"The money that's in Ireland is money that is subject to U.S. taxes. The tax law right now says we can keep that in Ireland or we can bring it back," Cook told the Washington Post. "We've said at 40 per cent, we're not going to bring it back until there's a fair rate. There's no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law."

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