Treasury Department Criticizes EU on Corporate Tax Probes
August 24 2016 - 1:59PM
Dow Jones News
By Richard Rubin
The U.S. Treasury Department released a sharp critique of the
European Commission's investigation of corporate tax breaks as EU
officials near the end of their inquiry into Apple Inc.'s
arrangements with Ireland.
In a 25-page paper released Wednesday, the Treasury elaborated
on arguments it has been making all year. The U.S. contends that
the EU has made an "unforeseeable departure from the status quo"
and is acting inconsistent with international tax norms.
"The Commission is charting a course that sets aside years of
multilateral efforts" on tax avoidance, Treasury wrote. "The
Commission's path runs the risk of the EU being perceived as having
used its unique structure to undermine and reverse international
progress."
EU officials have said repeatedly that they are merely following
their own laws against unfair competition, which require them to
recover improper "state aid" to companies in the form of selective
tax breaks provided by EU member countries.
Treasury's statements came as Apple awaits a decision in the
probe of its tax affairs in Ireland. Irish Finance Minister Michael
Noonan has said he expects a ruling in September or October.
In response to the Treasury report, a European Commission
spokeswoman said Wednesday that it is following a "standard
feature" of EU law and applying it indiscriminately against
companies regardless of where they are from. The spokeswoman said
officials remain "available to offer all necessary further
clarifications" to the U.S.
Those explanations haven't satisfied U.S. officials, and the two
sides have held meetings and exchanged letters throughout the year
without resolving the dispute. Treasury's white paper said the
government "continues to consider potential responses." U.S.
lawmakers have threatened to invoke an obscure section of the tax
code that allows retaliatory double taxation.
U.S. companies whose tax practices have been investigated
include Apple, Amazon.com Inc. and Starbucks Corp. Non-U. S.
companies also have faced review.
U.S. officials also see a potential risk to the federal budget.
Under current law, U.S. companies owe U.S. taxes on the profits
they earn around the world and get tax credits for payments to
foreign governments. To the extent they pay more in Europe, they
would pay less to the U.S. when they repatriate the money or when
Congress imposes a mandatory tax on their stockpiled foreign
profits.
--Nick Timiraos and Natalia Drozdiak contributed to this
article.
Write to Richard Rubin at richard.rubin@wsj.com
(END) Dow Jones Newswires
August 24, 2016 13:44 ET (17:44 GMT)
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