U.S Pressures The EU Over Apple And Amazon Tax Dispute

The U.S. Treasury Department has sharply criticized the tax investigations carried out by the European Commission saying that it sets a bad precedent for international tax agreements.

The EU is investigating a number of U.S based companies such as Apple and Amazon who are believed to have avoided paying taxes worth billions of euros.

Authorities in the United States made their feelings public in a whitepaper released last week, here they openly accused the EU of acting like a supranational tax authority and harming tax reforms agreements between countries.

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In a statement, Robert Stack, Deputy U.S. Treasury Department said,

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

The authorities have pointed out that the Commission was using a separate set of criteria to judge cases that involved U.S companies. The EU is expected to release the results of its investigation into Apple’s tax issues next week. Investment firm JP Morgan expects that Apple could be asked pay up to $19 billion (£14.4 billion) in back taxes.

Apple has been accused of avoiding taxes by keeping its profits in its Irish unit which operates under a tax deal offered by the government. The EU body is examining if Apple was given special tax arrangements not granted to others, which would be a violation of EU laws.

Tim Cook, Apple’s chief executive had earlier dismissed EU’s charge that Apple was avoiding taxes and termed the allegations as being politically motivated. Jack Lew, U.S. Treasury Secretary had also earlier called the EU’s investigations into American companies as disproportional in a letter sent to EU Commission President Jean-Claude Junker.

The EU has responded to the claims saying that U.S. companies were not being targeted unfairly. A spokesperson said that the EU Commission was in touch with U.S. authorities on this issue and was open to provide any clarifications that were needed. According to the EU, corporate tax avoidance results in member states losing upto €50 million to €70 billion in annual lost taxes.

EU Competition Commissioner, Margrethe Vestager has already issued an order to the Netherlands to collect between €20 million to €30 million as back taxes from Starbucks and Fiat. The Commission is also investigating tax breaks received by Amazon and McDonald’s in Luxembourg. All of the involved companies have denied any wrong-doing saying they have operated within the stipulated laws and have received no special treatment.

The Irish Government has also clarified that no special tax rate arrangements were made with Apple. The U.S Treasury has said that it is currently considering possible courses of action should the EU Commission continue with its current strategy.

Charlie Harrison

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