Europe’s Apple tax grab to spur US reforms
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. –
Jacob Lew has strongly criticised the European Union’s action.