The US stepped up its fight against the European Commission’s crackdown on tax avoidance by Apple Inc and other multinational companies, accusing the commission of unilateralism and overstepping its mandate.
In a white paper, the US Department of the Treasury said the commission’s probe into alleged special tax treatment that certain EU countries gave Apple, Amazon.com Inc, Starbucks Corp and Fiat Chrysler Automobiles NV “undermines the international tax system.”
With potentially billions of dollars in tax levies at stake, the US Treasury also reiterated its view that the investigations “disproportionately” target US companies and would prevent Washington from recovering taxes that it is eyeing from the companies’ offshore earnings.
“These investigations have major implications for the US. In particular, recoveries imposed by the Commission would have an outsized impact on US companies,” US Treasury Deputy Assistant Secretary for International Tax Affairs Robert Stack said in a statement. “US taxpayers could wind up eventually footing the bill” if the commission forces the companies into tax settlements.
The US acknowledged the problems around the issue of multinational firms obtaining state aid, in the form of secret and extremely lucrative tax breaks, from Ireland, Belgium and Luxembourg for setting up business in those countries.
However, it said those deals were made under international treaties and accepted tax practices.
The US Treasury in the white paper accused the commission of taking a “new approach” to established EU tax law in challenging EU member states’ legal tax breaks offered to multinational firms.
In addition, the US Treasury said the commission is effectively changing the tax rules now, but planning to apply them retroactively to the companies, which the US said was inconsistent with EU law and international practice.
“The commission should not seek retroactive recoveries under its new approach,” the white paper said.
In a statement, a commission spokesperson denied it was targeting US companies in particular and said that EU rules do not allow national tax authorities to give tax breaks to some companies that are not available to others.
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