US Treasury to launch pre-emptive strike on EU’s Ireland tax probe

Though it has the support of the US Treasury, the Cupertino company still faces a probe from the European Commission into whether it underpaid taxes on the part of its business based in Ireland.

“These investigations have major implications for the United States”, said Robert Stack, the Treasury’s deputy assistant secretary for worldwide tax affairs. “Apple pays every tax dollar we owe”.

But the US Treasury said the investigations are disproportionately targeting American companies. Many commentators believe it will find that the iPhone maker received a sweetheart deal that allowed it to shield tens of billions of euro of profit from taxes.

Last year, the European Commission ordered the Netherlands to recoup €30 million of unpaid taxes from Starbucks.

Moreover, Treasury argues that prior European Union decisions have never held that a selective advantage is granted by an European Union state if multinationals receive tax benefits that are not available to a standalone companies, as has been asserted by the Commission in these cases.

A US Senate investigation in 2013 found that Apple paid little or no tax on profits of at least $74bn over four years by exploiting gaps in the Irish and American tax code. The Treasury Department asked Brussels to reconsider its position on the case, arguing that penalizing these firms will cause negative effects for cross-border taxation.

Robert Stack, the US Treasury’s deputy assistant secretary for global tax affairs, said: “US taxpayers could wind up eventually footing the bill”. “If so, the companies’ US tax liability would be reduced dollar for dollar by these recoveries when their offshore earnings are repatriated or treated as repatriated as part of possible USA tax reform”. Furthermore, it is possible that the settlement payments ultimately could be determined to give rise to creditable foreign taxes.

“The investigations have global implications as well for the worldwide tax system and the G20’s agenda to combat [tax avoidance] while improving tax certainty to fuel growth and investment”. Given the new approach the Treasury says it not reasonable for the European Commission to collect ” back taxes”.

While that would be bad news for Apple, even if it’s sitting on a lot of cash, it has a big ally in it’s corner: the U.S. Treasury Department.

“There is no bias”, said Lucia Caudet, a European Commission spokesperson, adding, “All companies, no matter their nationality … should pay taxes in line with national tax laws”.

Apple’s battle with the European Union’s competition watchdog has been backed by the U.S. government, which on Wednesday waded into the complaint over the iPhone maker’s tax arrangements.