US condemns EU over plan to demand millions from Apple in unpaid taxes

The US warned that if Brussels pushes ahead with threatened plans to demand as much as £14.4bn from Apple for alleged unpaid taxes it will 'consider potential responses'

Zlata Rodionova
Thursday 25 August 2016 08:54
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European authorities have accused Ireland of helping the tech giant avoid paying high taxes
European authorities have accused Ireland of helping the tech giant avoid paying high taxes

The US Treasury Department has launched a stinging attack on the European Commission’s tax investigations in a bid to dissuade Brussels authorities from hitting Apple and other US multinational companies with billions of euros in underpaid taxes.

In a white paper released on Wednesday, US authorities said the EU was behaving like a “supranational tax authority” that endangered international tax reforms agreements.

The Obama administration warned that Brussels’ investigations into alleged tax avoidance by US companies, including Apple, Amazon and Starbucks, could create “an unfortunate international tax precedent”.

The criticism is the latest sign of growing tensions between the US authorities and the EU over Brussels treatment of US companies with headquarters in Europe.

Next month Brussels is expected to announce the results of its lengthy investigation into Apple’s tax affairs.

JP Morgan has estimated that Apple could be asked to pay up to $19 billion (£14.4 billion). The tech giant denies any wrongdoing.

In December, Tim Cook, Apple’s chief executive, said the idea that Apple has been avoiding taxes on overseas profits is “political crap”.

Earlier this year, Jack Lew, US Treasury Secretary, accused the EU of “targeting US companies disproportionately”, in a public letter to Commission President Jean-Claude Junker.

The Treasury Department also argued penalties for these companies could have broader repercussions.

“The investigations have global implications as well for the international tax system and the G20's agenda to combat [tax avoidance] while improving tax certainty to fuel growth and investment,” Robert Stack, a Treasury Department deputy wrote in a blog on the agency's website.

A spokeswoman for the EU commission said there was no bias against US companies.

“The commission has been in contact with US authorities on this matter on several occasions already and remains available to offer all necessary further clarifications,” she said.

Margrethe Vestager, EU competition commissioner, has already directed the Netherlands to recover €20 million to €30 million (£17-£25m)i n back taxes from Starbucks and Fiat. the Commission is also investigating tax arrangements that Amazon and McDonald’s got in Luxembourg.

The companies all say they acted within the law.

The EU estimates that corporate tax avoidance costs member states €50 million to €70 billion a year in lost taxes.

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