Apple has been under investigation in Europe for its tax plans and it seems like the European Commission is ready to pass a verdict. The European Commission is highly expected to pass a judgment against Apple that in the worst case scenario would see the most valuable company pay a fine that would run into the billions of dollars. One of Apple’s main investors, JPMorgan estimated that Apple could pay close to $19 billion if they were found to be in the wrong.
The European Commission opened an investigation into Apple’s tax deals after alleging that the tech giant signed a sweet tax deal with Ireland. The sweet deal would allow the company to move most of its profits to the most wholly owned Irish subsidiaries thereby allowing the company to essentially reduce the amount it paid in corporate taxes.
Luckily for Apple, it seems the US Treasury Department is in its corner, and therefore by default that means the Obama government is also supporting Apple.
A white paper released by the Treasury on Wednesday showed that the Treasury department was not appreciative of the way the European Commission was being biased towards American corporations such as Apple, Amazon, and Starbucks. The white paper was authorized by the Secretary of Treasury, Jack Lew. In the letter, the European Commission was accused of being supranational and also in a way accused the Brussel based European Commission of targeting American corporations unfairly and enacting something of a power grab.
In one of the quotes in the paper, the US Treasury wrote that the Treasury Department was also continuously considering possible potential responses if the Commission continued on its path. They also said that they hoped that the two organizations would be able to work together properly by going back to the same international tax laws that had been governing the world and had allowed for better relationships with each other.
Tax is a sensitive issue for Apple and it has a history of the subject even in the US. Congress investigated Apple back in 2013 about the company’s tax arrangements and the investigation even led to the Apple CEO, Tim Cook, to answer questions in front of a US Senate Subcommittee.
Apple apparently has billions of dollars in their offshore accounts that they would love to bring back to the US, but according to Cook, the system is flawed.
Mr. Cook told reporters that the money in Ireland where they have their European headquarters was also subject to US taxes if it was brought back. He said that the tax law allowed them to keep the money in Ireland or choose to be it back. He said that if the tax rate stayed at 40 percent, they would not bring it back to the country unless the rate changed and it became fair. There was not going to be anymore debate on it, he also pointed out, adding that what the company was doing was legal according to the current tax law.
He also noted that allegations that were brought up by the European Commission were that the company had received a sweet deal from Ireland, something which Ireland itself denies.
Clearly, Apple is not alone in its fight as the Treasury Department has joined in to fight for the American corporations, and it looks like Apple will enjoy its support for a time.
