EU Reviewing Tax Rulings on Starbucks and Apple

Written by | Thursday, June 12th, 2014

The European Commission is looking into whether the governments of Ireland, Luxembourg, and the Netherlands are not helping multinationals such as Apple, Fiat, or Starbucks regulate taxes in an unfair and anti-competition fashion. Brussels announced on Tuesday (June 10) that it had increased pressure on the three countries by investigating corporate tax practices that they have with the three multinationals. Ireland, Luxembourg, and the Netherlands help attract investment and boost job creation that may otherwise go to where the companies’ customers are based, Brussels says. Corporate tax avoidance has become widespread and is now high on the international political agenda after the giant transnationals like Google and Apple had used their complicated business structures to slash tax bills. As a result, countries have now promised to rewrite the rules that govern international taxes but analysts presume that it would be very difficult for the Commission to do anything about the deals that the three European countries struck.
Apple reacted to the suspicion saying that it has not been granted any selective tax treatment from the Irish government while Dublin added that it was sure that no state aid rules had been breached. Fiat refused to comment, and Starbucks’s reaction is pending. EU Competition Commissioner, Joaquín Almunia, commented that “selective tax advantages to the benefit of multinationals seriously distort competition in the EU Single Market. Moreover, when public budgets are tight, and citizens are asked to make efforts to deal with the consequences of the crisis, it cannot be accepted that large multinationals do not pay their fair share of taxes.” The Commission further specified that it was investigating the compliance of the pricing for transactions between company subsidiaries – transfer pricing – with Irish, Dutch, and Luxembourg tax measures. However, according to specialists, it is practically impossible to prove that the transfer pricing was favorable but the investigation might at least deter companies to keep off aggressive tax planning.

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