Sep 02, 2016

    US accuses EU of grabbing tax revenues


    THE United States has slammed the European Union of taking revenue intended for US coffers when it ordered Apple to pay up to US$14.5 billion (S$19.8 billion) in back taxes.

    The decision may cause friction at an international summit in China next week.

    The EU this week retroactively scrapped a tax deal Apple had with Ireland, arguing the company was effectively paying a tax rate of a fraction of 1 per cent on its profits.

    "I've been concerned that it reflected an attempt to reach in to the US tax base to tax income that ought to be taxed in the United States," US Treasury Secretary Jack Lew said.

    He was at an event on Wednesday to discuss the US' position ahead of a meeting of the Group of 20 industrial nations in China next week.

    He said making Apple pay higher taxes in Ireland could let the company deduct those payments from what it owes to the US, reducing US revenues.

    The European Commission rulings appeared to be highly focused on US companies, Mr Lew noted.

    "We think that it undermines the environment in Europe for international business because it creates uncertainty that ultimately will not be good for the European economy."

    For now, other US companies under scrutiny for their EU tax arrangements are staying in the background as Mr Lew, Apple and certain industry trade groups lead the charge against the European Union action., for example, declined to comment on an EU probe of the tax treatment of royalties paid by a Luxembourg unit. In the past, it has said it got no special treatment.

    But a trade group representing US technology companies said it is concerned the EU will hit other firms with retroactive penalties.

    The EU has ordered coffee chain Starbucks to pay more Dutch taxes while Amazon and restaurant group McDonald's are still being investigated.