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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.