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Is Apple cutting corners when paying taxes? |
The US government has threatened the European Commission (EC)
with retaliation if the body decides to proceed with its plan to demand
millions of dollars in unpaid taxes from technology giant Apple.
The
US Treasury Department issued a rare warning on Wednesday, August 24,
accusing the Brussels-based body of becoming a “supranational tax
authority” that poses a threat to international agreements concerning
tax reform.
“The US Treasury Department continues to
consider potential responses should the Commission continue its present
course,” the Treasury said in its strongest language to date.
“A
strongly preferred and mutually beneficial outcome would be a return to
the system and practice of international tax cooperation that has long
fostered cross-border investment between the United States and EU member
states,” the warning added.
The European Union (EU)
has been investigating a series of tax deals between Apple and Ireland
which allow the iPhone maker to pay little or no tax on income earned
across Europe.
The EC is expected to rule on the case
next month. This is the biggest corporate tax avoidance investigation
ever undertaken by the commission.
The EC is the
executive body of the EU, responsible for implementing decisions,
proposing legislation, upholding the EU treaties and managing the
day-to-day business of the bloc.
According to
investment bank JP Morgan, if Apple is forced to retroactively pay the
Irish corporate tax rate of 12.5 percent on its pre-tax profits, the
company might need to cash out as much as $19 billion.
A
2013 report by US Senate confirmed that Apple has paid little to no
taxes on at least $74 billion of the profit it earned by exploiting
Irish and American tax laws.
Tim Cook, who became
Apple’s CEO after the death of its founder Steve Jobs five years ago,
has denounced the case as “political crap.”
“There is no truth behind it,” he said. “Apple pays every tax dollar we owe.”
The
EU estimates that tax avoidance by multinational corporations costs
member states anywhere between $50 million to $78 billion a year in lost
taxes.
In addition to Apple, other American companies like Amazon and Starbucks are also suspected of tax evasion.
Note EU-Digest: Hopefully
the EU Commission does not cave-in for these US misguided threats and
intimidations and tells the US Treasury Department where to shove this
warning, which is protective of US corporate tax evaders.
Read more: PressTV-US warns EU over Apple’s tax case