The European Union has rejected concerns raised by the U.S. government that it is unfairly targeting American firms as part of investigations into sweetheart tax deals.
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The European Commission has hit back at USA concerns about competition probes into transfer-pricing arrangements by US -headquartered companies doing business in Europe including Apple (AAPL) and Amazon (AMZN). “If so, US taxpayers could wind up eventually footing the bill for these State aid recoveries in the form of foreign tax credits that would offset the USA tax bills of these companies”.
Last year, the European Commission ordered the Netherlands to recoup €30 million of unpaid taxes from Starbucks.
Apart from Apple, the European Union commission is also investigating Starbucks (NASDAQ:SBUX) and Amazon (NASDAQ:AMZN) over allegations of tax evasion. However, Amazon argued that it abides by the same tax rules as other companies in Luxembourg.
“US taxpayers could wind up eventually footing the bill” if the commission forces the companies into tax settlements. The federal agency contends that “The Commission’s Approach Is New and Departs from Prior EU Case Law and Commission Decisions” and conflicts with worldwide norms that subverts the global tax system.
The American government has blamed American companies for unfair and potentially illegal tax policies many times in the past.
US officials are publicly criticizing Europe’s investigations into favorable tax arrangements that Apple and other multinational companies have reached with Ireland and a few other countries.
“The US Treasury Department continues to consider potential responses should the Commission continue its present course”, the paper added.
The US has been intensifying efforts to convince the EC to refrain from hitting Apple Inc and other companies with demands for possibly billions of euros in underpaid taxes.
The EC said there was “no bias against USA companies” in the probes.
Earlier this year, the U.S. government slammed the investigations by Brussels, accusing the executive body of targeting United States companies.
The Treasury released a white paper on Wednesday, commissioned by Treasury Secretary Jack Lew, that did not mince words while defending American companies, including Apple, Starbucks, and Amazon.
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It also comes amid President Obama’s push to discourage US companies from moving their tax residences overseas to avoid USA taxes, a ploy known as corporate inversions. The Commission has also threatened the ability of member states to honor tax treaties, and undermines progress made under the OECD/G20 base erosion profit shifting project, Treasury said.
