The European Union's combative Competition Commissioner Margrethe Vesthager has issued orders directing Ireland to collect $14.5 bn in unpaid back taxes for 10 years, with interest, from Apple. The EU found that the sweetheart bilateral deal struck by Irish government with Apple allowed the company to pay just 50 Euros in taxes for every million euros in profit in 2014. This follows similar decisions by the Commissioner on Starbucks in Netherlands, Amazon in Luxembourg, and Anheuser-Busch InBev in Belgium.
The decision has evoked strong reaction across the Atlantic, with the US Treasury saying that EU is overstepping its jurisdiction, is unfairly targeting US companies, and is even hurting global efforts to curtail tax avoidance.
The US position on this is very interesting. Consider the issue in perspective. Ireland was charged with having broken EU laws by providing preferential tax treatment to Apple (at the expense of others). Now the competent authority, the Competition Commission, has found Ireland guilty of violating the law and Apple guilty of having benefited from the violation. The decision is obviously subject to appeal and due process. In this context, the reaction from Washington is clearly questioning the legitimacy of the EU legislation itself. This is ironical, coming as it does from the US, whose agencies regularly exercises extra-territorial jurisdiction, whether in allowing claims by vulture funds over sovereign debt or penalizing foreign subsidiaries of investment banks for doing business with those countries on which US has imposed sanctions.
Even more surprisingly, the support for Apple for its tax avoidance strategy in Ireland stands in contrast to the flak that the same company, and several others, get for doing exactly the same thing to avoid paying tax in the US. In fact, US non-financial companies hold nearly $1.7 trillion in cash overseas, with Apple alone having $215 bn, in order to avoid paying higher taxes at home.
Clearly, what is sauce for the American goose is not sauce for EU gander!