Moscovici said he found Ireland’s decision to fight the tax ruling-which orders Ireland to recover up to 13 billion euros ($14.5 billion) in unpaid taxes plus interest from Apple Inc.
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Yesterday the US Department of the Treasury issued legal guidance reducing the scope that companies have to apply foreign tax credits against their American tax obligations.
The good news for Apple is that any tax claimed by the individual countries in which sales were made would reduce the tax bill payable to Ireland, so the total payout would be unchanged.
Jack Lew, the treasury secretary, has…
“International tax loopholes are a thing of the past”, Mr Jeroen Dijsselbloem said, adding that Apple should “get ready” to pay back taxes in Europe and the US. An Apple spokesman didn’t immediately respond to a request for comment.
“There is widespread agreement that our business tax system needs to be fixed”. Those companies reduced the US tax they owed on almost $420 billion in foreign income. That has encouraged many companies to keep their worldwide profits overseas to avoid the hefty 35 percent tax rate at home. Under U.S. rules, companies can combine income and credits from high-tax countries, like Japan and Germany, with those from low-tax countries, like Ireland and the Netherlands.
“The Commission ruling – going back and revising 10 years of tax liability on grounds of competition policy, rather than of tax law – creates uncertainty for many other companies about their present liabilities”, he said.
Edward Kleinbard, a University of Southern California professor and a former chief of staff of the congressional Joint Committee on Taxation, called the corporate technicians who blend and refine such arrangements “tax distilleries” in a 2011 paper.
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American companies alone have avoided paying taxes to the United States by holding more than $2 trillion in deferred overseas income.
