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.

101 Comments

singularity 11 Years · 1323 comments

About 8 years ago

How dare the EU investigate a potential breach of the rules and omg then enforce any ruling.
There is no punitive recovery if the deal between Apple and Ireland is found to breach the rules.

jbdragon 10 Years · 2312 comments

Apple followed LEGAL Tax Laws!!! Apple didn't put the loopholes into the tax code, the politicians did. Now they want to change the rules and steal money from company's. That's exactly what they are doing, Government stealing. Really, it's nothing new. You want to change the rules and close the loopholes, great, the extra taxes taken start at that point forward. I don't have a problem with that. American company's will slowly start to leave where it makes the most sense.

jbdragon said:

Apple followed LEGAL Tax Laws!!! Apple didn't put the loopholes into the tax code, the politicians did. Now they want to change the rules and steal money from company's. That's exactly what they are doing, Government stealing. Really, it's nothing new. You want to change the rules and close the loopholes, great, the extra taxes taken start at that point forward. I don't have a problem with that. American company's will slowly start to leave where it makes the most sense.

No the EU is investigating the charge that Apple had a deal that constituted to state aid which was not the same as other companies had access to which contravenes the rules. It's not changing the rules it's looking to see if the rules weren't enforced.

quinney 18 Years · 2527 comments

The Treasury Dept. is bummed because if the EU collects more taxes from Apple, Apple will be able to deduct that amount from what they would
owe the U.S. if they patriated their offshore holdings at some point.

gatorguy 13 Years · 24627 comments

quinney said:

The Treasury Dept. is bummed because if the EU collects more taxes from Apple, Apple will be able to deduct that amount from what they would
owe the U.S. if they patriated their offshore holdings at some point.

Well close. If the taxes are paid overseas the US will never see a dime of that. "Offshore Holdings" is a misnomer IMO anyway as the money is safely deposited in banks right here in the US for the most part. It's "overseas" in technical terms only.

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.