EU officials say it was Washington which had put them on to the scheme of back taxation in the first place even as the United States is furious at the European Union for handing Apple a $14.5 billion tax demand on Tuesday.
The European Commission was prompted to launch its own inquiries in June 2013 after a U.S. Senate report in May 2013 revealed that the tech giant’s deal with the Irish government to rule a big slice of its global earnings untaxable.
Just as efforts to reach a transatlantic free trade pact unravel, EU-U.S. economic relations are endangered by the Commission’s order that Apple pay 13 billion euros in back taxes to Ireland — which the company and Dublin are appealing, the U.S. Treasury said.
Brussels had made “a cheap money grab” for U.S. revenues, a senior Democratic senator said.
The Europeans were only trying to take what U.S. authorities had failed to claim by not closing loopholes that allowed firms to hoard profits overseas, said Carl Levin, his party colleague who chaired hearings into Apple’s taxes three years ago.
“The IRS has failed to stake a claim for U.S. taxes on those revenues. So Europe attempts to fill the vacuum. Shame on Apple for dodging U.S. taxes. Shame on the IRS for failing to challenge Apple’s tax avoidance,” he said in a statement, referring to the U.S. Internal Revenue Service.
The manner in which global corporations have exploited competition for investment to blunt states’ efforts to co-operate against tax avoidance is reflected in the mudslinging between politicians, says Marcel Fratzscher, president of leading German economic think-tank DIW Berlin and author of a new book on growing inequality.
“Companies are playing one government against another,” he told Reuters.
Grounds to demand disclosure by Apple and Ireland were given to her Spanish predecessor by the hearings at the Senate Permanent Subcommittee on Investigations chaired by Levin, said EU Competition Commissioner Margrethe Vestager, a straight-talking Dane who dismisses talk of leading an anti-American crusade.
“The Commission listened and decided to look deeper into the matter,” Vestager said in June. For providing evidence to help break secrecy around nearly 1,000 cases across Europe, she credited media reporting and hearings in the British parliament.
Highlighting just the complaints of Levin and other senators three years ago when they skewered Apple CEO Tim Cook for failing to bring cash home, the Commission said in its judgment on Apple that the United States and other countries were welcome to try and claim some of the unpaid taxes for themselves.
Complaints from U.S. President Barack Obama’s administration that Europe is out to punish American success has been fueled by a series of EU accusations that Google, part of Alphabet, has abused its market power, in addition to orders for Apple, Starbucks to pay more Dutch taxes and he onging investigations against A,azon.com and McDonald’s.
Political pressures drove different responses by different authorities, said competition lawyer Pierre Sabbadini. While the size of the companies targeted gave them clout with political leaders, too, leaks and public hearings on tax deals had created pressure among voters for the EU to act in 2013, he said.
“When investigation-target companies have grown to the size of Apple, they can reach out for political support,” he said.
(Adapted from Reuters and CNBC)