The European Union’s crackdown on corporate tax avoidance has landed on Apple; its antitrust regulator is demanding that the U.S. tech giant pay Ireland up to 13 billion euros ($14.5 billion) plus interest in back taxes.
The ruling is the highest profile move yet in the European battle to make international companies pay what authorities consider their fair share of EU taxes. The EU charges that Apple and other big companies struck deals with EU countries to pay unusually low tax in exchange for basing their European operations there.
The U.S. government has countered that European officials are unfairly targeting American companies.
The EU’s investigations of Apple and other multinationals trace their origins to a 2014 leak of documents that showed how big companies shop around among EU states to get as low a corporate tax rate as possible. The revelation that has fueled popular anger in Europe, where cash-strapped governments had been raising taxes on households.
Here are some questions and answers about the issue.
Why Did the EU Launch the Tax Crackdown?
European countries are keen to attract big companies to their territory; sometimes too keen, with some offering ultra-low tax rates as incentives. So the EU launched a drive to combat tax avoidance by investigating the deals that allow multinationals to slash their bills in countries like Luxembourg, Ireland and the Netherlands. The EU says some 50-70 billion euros ($56-79 billion) are lost every year due to tax avoidance. Also, some multinationals shift their earnings made in EU countries to the one low-tax country they are based in. That helps them lower their overall tax bill. In January, the EU Commission, which polices EU rules, unveiled new plans to tackle the problem. They include closing tax loopholes and improving the way tax information is shared across the 28-nation EU.
Don’t EU Countries Make Their…