US criticises EU tax probes ahead of Apple ruling - Politics Forum.org | PoFo

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#14712684
BBC
August 25, 2016
The US Treasury Department has warned the European Commission about taking action against US companies over tax avoidance allegations.

The commission is investigating tax deals granted to US companies for setting up headquarters in Europe.
Next month the EU is expected to deliver its decision on Apple. The company could be hit with a multi-billion pound bill for unpaid taxes.
The commission said there was "no bias against US companies" in the probes.

In a report published on Wednesday, the US regulator said action by Brussels would make it into a "supra-national tax authority" overriding the tax codes of its member states.
It also said Brussels was using a different set of criteria to judge cases involving US companies, adding that potential penalties were "deeply troubling".

Apple has been accused of sheltering billions of pounds in profit in the Republic of Ireland tax-free, under a deal it reached with Irish authorities. JP Morgan, an investment banker for Apple, has said the company could face a bill for $19bn (£14.3bn) in a worst-case scenario.

Several companies including Apple, Amazon and Starbucks are under investigation by the European Commission over allegations of tax avoidance.

Last year, the commission ruled that Starbucks and Fiat were given sweetheart tax deals in the Netherlands.

The EU's executive body said it was investigating whether Apple was given special tax benefits for setting up in Ireland that were not granted to other companies, potentially violating EU state aid rules.

Earlier this year the US government publicly challenged the investigation by Brussels, accusing it of targeting US corporations.

In its latest move, the Treasury Department asked Brussels to reconsider its actions against several US companies including Apple, Starbucks, and Amazon. It argued penalties for these firms could have broader repercussions for cross-border taxation.

"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.

He argued that a charge from the European Commission could be considered a foreign tax credit in the US - a classification that could reduce the businesses' tax bills in the US.

The Treasury Department said it was continuing to "consider potential responses should the commission continue its present course".

In response the commission said it was trying to ensure EU law was applied equally to all companies operating in Europe.

No selective treatment
Apple has previously said that it had not had "any special tax deal with the Irish government".

"We have received no selective treatment from Irish officials," the company has said. "Apple is subject to the same tax laws as scores of other international companies doing business in Ireland."

The Irish finance ministry has also insisted Apple "did not receive selective treatment and there was no 'special tax rate deal'".

"Ireland is confident that there is no state aid rule breach in this case and we will defend all aspects vigorously," the Department of Finance said two years ago when the European Commission announced its formal investigation.


Looks like US government is doing what it does best; that is protects its plutocrats and corporations.
#14712773
The United States is a paper tiger. They were crushed by Vietnam and they will be crushed by Europe. They are the dross that Europe and Africa didn't want. Puritans, biblical literalists, people who still wanted to burn women at the stake for witchcraft when even the Catholics had stopped, people sold into slavery by their fellow Africans. How could a nation built on foundations like that succeed long term?
#14713028
In its latest move, the Treasury Department asked Brussels to reconsider its actions against several US companies including Apple, Starbucks, and Amazon. It argued penalties for these firms could have broader repercussions for cross-border taxation.

In other words the US is concerned about how the ruling would affect its own tax revenues.

It will be interesting to see how far the EU is willing or able to go in leveling the tax playing field among its member states and how this will affect future investment in low tax EU countries. The two rulings against Luxembourg and the Netherlands, worth about EUR30 million each, seem a bit underwhelming and more like the tip of a massive iceberg, which probably has to do with the fact that most of the tax reducing schemes in Luxembourg, Ireland, etc. are perfectly legal.
#14714035
The Washington Post
August 30 at 3:00 PM
Renae Merle wrote:European authorities ruled Tuesday that Apple owes more than $14.5 billion in back taxes after striking a sweetheart deal with Ireland that allowed the tech giant to underpay for more than a decade.

Apple paid a tax rate of just 1 percent or even less — .0005 percent, in some years — on its European profits, according to the European Commission, which launched an investigation into the company’s international tax strategies in 2014. That arrangement, according to the commission, is illegal because it amounts to an improper trade incentive.

The ruling is likely to rattle many U.S. corporate boardrooms where aggressive tax strategies have become standard practice. The European Commission is also investigating tax deals reached by Amazon and McDonalds in Europe and has said it would launch other probes soon.

The investigations also create a new sore spot for the Obama administration: It has been frustrated by U.S. companies that it says are dodging their American taxes, even as it forcefully defends those same companies against European authorities. The Treasury Department has complained that U.S. multinationals were being unfairly targeted by the EU and said Tuesday it was “disappointed” by the ruling.

The more pressing issue for the Obama administration is that if Europe successfully collects more cash from U.S. companies, it will leave less to be taxed by the United States. The dispute could escalate tensions between the U.S. and Europe over how — and where — global companies pay taxes.

“Perhaps the [European Commission] decision will spur the U.S. authorities to step up their own efforts to collect more taxes from Apple. Apple may be a tax cheat, but Apple is our tax cheat,” said Steven Rosenthal, a fellow at the nonpartisan Tax Policy Center.

The European Commission is seeking much more than many tax experts expected, a record amount that could grow if interest is collected.

But the $14.5 billion in back taxes is just a slice of Apple’s cash stockpile. The firm has more than $200 billion in cash, most of it held overseas where it can’t be taxed by the United States. It has also borrowed money at low rates over the last few years.

Apple and the Irish government said they would appeal the ruling.

“We never asked for, nor did we receive, any special deals.” Apple’s Chief Executive Tim Cook, said in a letter to customers. “We now find ourselves in the unusual position of being ordered to retroactively pay additional taxes to a government that says we don’t owe them any more than we’ve already paid.”

Apple, which has had operations in Ireland since 1980, said the ruling could ripple throughout Europe and scare companies away from investing in that part of the world.

“The European Commission has launched an effort to rewrite Apple’s history in Europe, ignore Ireland’s tax laws and upend the international tax system in the process,” the Cupertino, Calif.-based company said in a statement.

In Dublin, Ireland’s finance minister, Michael Noonan, denied that the country sidestepped E.U. tax rules, raising yet another potential flash point between Brussels and member states over the reach of regulations and oversight. uch questions helped tip the scales in Britain in June’s vote to leave the 28-nation bloc, and have complicated transatlantic trade talks.

“This is necessary to defend the integrity of our tax system, to provide tax certainty to business and to challenge the encroachment of E.U. state aid rules into the sovereign member state competence of taxation,” Noonan said in a statement.

Across Europe, just how much — or little — U.S. multinational firms are paying in taxes is coming under increasing scrutiny.

French authorities recently raided the Paris headquarters of two U.S. corporate giants, Google and McDonald’s. And European authorities have accused the Netherlands of allowing Starbucks to avoid more than $30 million in taxes.

The Obama administration has repeatedly objected to these investigations and the Treasury Department took the unusual step last week of issuing a 25-page report critiquing the European Commission’s investigations into alleged tax avoidance schemes by U.S. firms. The investigations “undermine” agreements on international tax law and could hurt U.S. taxpayers, the Treasury Department said.

But it may not be able to stop them.

The European Commission’s actions “could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the U.S. and the EU,” an agency spokesperson said in a statement.

The international scuffle centers on the more than $2 trillion in overseas profits that U.S. corporations have refused to bring back to the United States, where they would face a hefty tax bill. U.S. lawmakers and regulators have lamented the practice but have had little success in pressing the corporations to bring the money home. Apple has the largest stash of foreign profits — more than $200 billion — of any U.S. multinational company.

Now European tax authorities are also eyeing this money, international tax experts say. The profits have often been routed through low-tax European countries, potentially cheating others nations in which the companies operate, they argue.

Apple runs its European operations through Ireland, where the corporate tax rate is just 12.5 percent compared with the 35 percent statutory rate in the United States. But the European Commission found that Apple set up a system that allowed it to pay even less.

“Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years,” European Commissioner Margrethe Vestager, who is in charge of competition policy, said in a statement from Brussels.

Apple attributed its European profits to a phantom “head offices” in Ireland, the investigation found. These offices “existed only on paper and could not have generated such profits,” the commission said. In fact, Apple recorded all sales in Ireland rather than in the countries where the products were sold, the investigation found.

The “tax treatment in Ireland enabled Apple to avoid taxation on almost all profits generated by sales of Apple products in the entire” European Union, the commission said.


This isn’t the first time Apple’s tax strategies have been under scrutiny.

A Senate investigation in 2013 found that Apple used a “complex web” of offshore entities in order to pay little or no taxes on tens of billions it earned overseas. Between 2009 and 2012, the company shielded $74 billion in profits from U.S. tax laws, the report found.

The company has repeatedly said that it pays all of the taxes it owes and is the largest taxpayer in the word. he problem lies with the complex corporate tax code, company officials have said.

“Apple has long supported international tax reform with the objectives of simplicity and clarity,” Cook, Apple’s chief executive, said in the letter to customers.
It is interesting to see how US government is completely in cahoots with its corporations. No wonder they "can not" get their corporations to pay taxes at home.

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