USA TODAY International Edition
Firms fret over Apple case: Who is next?
EU orders tech giant to pay $ 14.5 billion
The European Union ruling that Apple must pay $ 14.5 billion in what it says are unpaid back taxes could be the start of protracted tax battles between the EU and multinationals, tax experts say.
“This is a harbinger,” says Thomas Cooke, a professor at Georgetown’s McDonough School of Business. “There are many companies saying, ‘ Are we next? And not just in Ireland?’ ”
Sweetheart tax deals lavished upon tech giants and other U. S.based companies by Ireland and Luxembourg have drawn the scrutiny of Europe’s top regulators, leading to rulings or probes against at least six large multinationals. More are likely.
Google, Microsoft and Facebook, all of whom enjoy highly favorable tax deals, are “absolutely on the radar of the EU,” says Brad Badertscher, professor of accountancy at the University of Notre Dame’s Mendoza College of Business. “This is a signal that this is not a tax haven. ( The EU) is like secondary eyes looking over each government.”
The U. S. Treasury Department says unilateral moves to retroactively assess taxes are unfair and could undermine the “spirit of economic partnership.”
White House spokesman Josh Earnest says the EU decision could prompt the transfer of revenue from U. S. taxpayers to the EU. That’s because any tax payments Apple must pay in Europe could be deducted from its U. S. tax obligations.
Ireland disputes the findings, saying it hasn’t done tax deals.
According to the commission, Apple booked most product sales in Europe, the Middle East, Africa and India through two Irish subsidiaries. It avoided paying Ireland’s 12.5% tax rate by allocating most of the European profits to a “head office” located in no country. The result: a tax rate of 0.005% in 2014.
“This is a signal that ( Ireland) is not a tax haven. ( The EU) is like secondary eyes looking over each government.” Brad Badertscher, University of Notre Dame