US Treasury takes last stab at deterring tax judgment against Apple & Ireland
The U.S. Treasury Department issued a special white paper on Wednesday, threatening that it will "consider potential responses" should the European Commsission demand that Ireland collect billions of euros in back taxes from Apple.
"This shift in approach appears to expand the role of the [E.U. competition directorate] beyond enforcement of competition and state aid law...into that of a supranational tax authority," the paper said according to the Financial Times. The document was commissioned by Treasury Secretary Jack Lew.
The European Commission first began looking into Apple's Irish tax situation in 2013, suggesting that the Irish government may have given Apple preferential treatment in order to attract jobs and money. Through tax loopholes, the company ended up paying just 2 percent on funneled international revenue, well below the normal 12.5 percent tax rate. A judgment could finally be issued in September.
The EU has already rendered judgments against the Netherlands and Luxembourg, which were accused of offering illegal state aid to Starbucks and Fiat Chrysler, respectively. That may not bode well for a ruling on Apple.
Indeed, the Treasury paper claimed that a finding against Apple and Ireland would undermine tax "certainty," and create a precedent under which other agencies will seek "large and punitive retroactive recoveries from both U.S. and E.U. companies."
The issue of corporate tax avoidance has gained increasing attention in recent years, driven by concerns about wealth inequality and increasing strain on government budgets and services. Earlier this year, the so-called Panama Papers exposed numerous businesses and individuals using that country as a tax haven, some legally and some not.
The European Commission first began looking into Apple's Irish tax situation in 2013, suggesting that the Irish government may have given Apple preferential treatment in order to attract jobs and money. Through tax loopholes, the company ended up paying just 2 percent on funneled international revenue, well below the normal 12.5 percent tax rate. A judgment could finally be issued in September.
The EU has already rendered judgments against the Netherlands and Luxembourg, which were accused of offering illegal state aid to Starbucks and Fiat Chrysler, respectively. That may not bode well for a ruling on Apple.
Indeed, the Treasury paper claimed that a finding against Apple and Ireland would undermine tax "certainty," and create a precedent under which other agencies will seek "large and punitive retroactive recoveries from both U.S. and E.U. companies."
The issue of corporate tax avoidance has gained increasing attention in recent years, driven by concerns about wealth inequality and increasing strain on government budgets and services. Earlier this year, the so-called Panama Papers exposed numerous businesses and individuals using that country as a tax haven, some legally and some not.
Comments
There is no punitive recovery if the deal between Apple and Ireland is found to breach the rules.
owe the U.S. if they patriated their offshore holdings at some point.
But I'd differ from your view only as it applies to Apple. They wouldn't "repatriate" this money anyway as they have no reason to. In fact they get a double benefit from borrowing against those funds to finance their stock buybacks as the interest is deductible. Apple ain't bringin' in home. Period. So no I don't think it's Apple and taxes the Treasury Dept is concerned about but instead the thousands of other US companies who may have plans to bring some of their foreign cash home, but may have already been forced to pay foreign corporate taxes before doing so.
apple has long had a large presence in Ireland. Right now, that's over 6,000 people, with that number due to expand further. Considering the population of Ireland, that's a large percentage, and makes Apple one of the largest employers in Ireland.
so to make Ireland the center of European operations, and thereby the focus of their tax returns isn't actually illegal, according to EU law. The fact too, is that it's actually Ireland that's the subject of the investigation, not Apple, or others. The problem for Apple is that if Ireland is required to pay those taxes, then it's the companies that will be forced to do the actual payments.
if this were France or Germany, this investigation never would have happened, as that two do whatever they want.
Apple has no reason to patriate these funds right now, but you have no way of knowing what the case will be in the future, what with so many U.S. politicians making derogatory statements about companies who choose to create jobs outside the U.S. and floating ideas about how to force changes in that practice.
This not about Apple's tax practices so has nothing to do with what other European companies do tax wise.
I think you are right about the French and German governments being treated differently, but that seems only to apply to state aid to significant indigenous companies of strategic importance, such as when the French government propped up Air France - even then there was an action brought against the French government, even if they slimed their way around it. I'm pretty sure if the French or German governments had been found to be giving assistance to a foreign company the way Ireland is accused of, they too would have copped it.
This is all part of their quest to enforce US Law over every square inch of this planet and basically say 'up yours' to local laws in the process.
The US National Debt is IMHO the reason behind this and other moves.
It would surprise me to see a move where a company supplying a US foreign subsidiary in a foreign country be the next target for IRS Tax demands. you do business with any US company anywhere on the planet and you are liable for US taxes on your worldwide operations.
That won't go down very well and will IMHO make the 'New USA' of Pres Trump easier to achieve. The Isolationism of the 1930's will pale into insignificance by what could happen if the US took that road.
Even the discount clothing store Primark has 4000 employees in Eire. Kerry Group (a dairy company) has 24000 employees, CRH has 89000+ employees, Ryanair, the budget airline has over 9500 employees. Smurfit Kappa employs 43000+ irish while Allergan has 30000 strong workforce in the country. Don't kid yourself thinking Apple is the BIG player, Google has the same 6000 employee figure there too, even the betting company Paddy Power has more at 7000 employees.