US Treasury turns heat up in Apple tax argument

A warning for the European Commission before a verdict on the tech giant's tax is reached...

US Treasury turns heat up in Apple tax argument

Image: Photocall Ireland

The growing war of words between Washington and Brussels over the latter's treatment of US multinationals soured significantly yesterday as the US Treasury Department accused the European Commission of undermining the global tax system.

The Treasury published a strongly-worded, 25-page white paper that accused the EU Commission as acting like a “supra national tax authority”.

It argues that potentially demanding back taxes from those concerned would set an "undesirable precedent", stating:

"Because the Commission's approach departs from prior practice, it should not be applied retroactively.

"Indeed, it would be inconsistent with EU legal principles to do so. Moreover, imposing retroactive recoveries would undermine the G20s efforts to improve tax certainty and set an undesirable precedent for tax authorities in other countries."

The complaint comes ahead of a decision on the Apple case, which Minister for Finance Michael Noonan signalled should be delivered in September or October.

The biggest such investigation involves the Commission’s allegation that Ireland offered Apple special tax concessions on two separate occasions over the past 20 years. Such a decision would require Ireland to reclaim billions of dollars in tax foregone, though we have said we’ll appeal it to the European Court of Justice

The US Treasury adds that it will join Ireland in launching an appeal if the case goes against the tech giant.

US Treasury official Robert Stack warned that “a substantial number of additional commission investigations against US firms may lead to a growing chilling effect on US-EU cross border investment".

Earlier this year, a US Senate Finance Committee earlier recommended that Washington impose double tax rates on certain EU companies in the US if the Commission applied retrospective tax fines on US multinationals in Europe.