Europe’s Ap­ple tax grab to spur US re­forms

The Myanmar Times - - International Business -

EUROPE’S or­der for Ap­ple to pay US$14.6 bil­lion in back taxes could pro­voke US tax re­forms and a sig­nif­i­cant break for firms repa­tri­at­ing off­shore earn­ings, US Trea­sury Sec­re­tary Ja­cob Lew said.

Mr Lew said high US cor­po­rate tax rates drive com­pa­nies to seek tax havens like Ire­land, which of­fered Ap­ple what the Euro­pean Com­mis­sion ruled was an il­le­gally low rate to en­cour­age it to in­vest there.

While he said that the EC move es­sen­tially raided po­ten­tial US gov­ern­ment tax re­ceipts, Mr Lew said the episode should give a boost to ef­forts to re­form the US sys­tem.

“I would hope that the idea that a Euro­pean Com­mis­sion ac­tion will reach into our tax base and take US tax rev­enues and make them theirs will help trig­ger this de­bate about tax re­form,” Mr Lew said.

“If los­ing bil­lions of dol­lars of our tax base to an­other au­thor­ity isn’t go­ing to get peo­ple’s at­ten­tion, I don’t know what will.”

Mr Lew has strongly crit­i­cised the Euro­pean ac­tion as ap­ply­ing retroac­tive taxes on a com­pany that had abided by the rules of Ire­land, where the US tech gi­ant en­joyed a spe­cial ef­fec­tive rate of just 0.005 per­cent, the Euro­pean Com­mis­sion said.

But he has also re­peat­edly in­sisted that the Ap­ple prof­its re­tained in Ire­land are sub­ject to US tax­a­tion.

US com­pa­nies have stock­piled some $2.4 tril­lion in un­taxed for­eign­earned prof­its off­shore, ar­gu­ing that Washington needs to lower the statu­tory 35pc tax rate for them to repa­tri­ate the funds to the US.

Mr Lew said he ex­pects Washington to craft a one-off dis­count for the repa­tri­a­tion of off­shore prof­its in the next year in or­der to bol­ster gov­ern­ment rev­enues. –

Photo: EPA

Ja­cob Lew has strongly crit­i­cised the Euro­pean Union’s ac­tion.

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