Monday

28th May 2018

US accuses EU of bias in tax probes

  • US burger chain accused of dodging more than €1 billion in taxes (Photo: _skynet)

US authorities accused EU regulators of "disproportionately" targeting US firms in their broader efforts to crack down on corporate tax evasion.

US treasury secretary Jack Lew demanded that the EU back off in its probes into the tax practices of big US firms like Apple, Amazon, Starbucks, and McDonald's.

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In a letter seen by Reuters, Lew said pursuing civil investigations against predominately US companies "creates disturbing international tax policy precedents".

The letter, addressed to EU Commission president Jean-Claude Juncker, warns the investigations may unravel "mutual cooperation and respect that many countries have worked so hard to develop and preserve".

Lew's remarks add to the mounting US criticism of the EU and the perception it unfairly targets US companies.

The US concerns are also rooted, in part, in not being able to collect as much tax on foreign profits by US firms if their rates increase in the EU.

The International Consortium of Investigative Journalists in November 2014 cited both Apple and Amazon among the list of some 340 companies that slashed global tax bills after brokering dubious sweetheart deals with tax authorities in Luxembourg.

Some firms paid less than 1 percent of profits shuffled into Luxembourg.

The deals are seen by the EU executive as a form of illegal 'state aid' that gives some businesses an unfair competitive advantage over others that pay much higher tax rates.

The Financial Times reports Apple may have to pay up to $19 billion in back taxes should EU regulators find it benefited from illegal state aid.

McDonald's, based in Luxembourg, is accused of dodging more than €1 billion in taxes in Europe.

Lew's letter follows a recent policy effort by the EU executive to force companies, including US firms, to publicly disclose their taxes and earnings.

The EU Commission, for its part, denies any bias against US firms.

“In its state-aid decisions on tax rulings to-date, the commission has ordered member states to recover unpaid taxes mostly from European companies," said the commission, as reported by the Wall Street Journal.

In January, Belgium was told to recover over €700 million in lost tax revenue after giving preferential tax treatment to some 35 multinationals.

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