White House 'concerned' EU tax penalty on Apple may hit US taxpayers

Published August 30, 2016
A person stands near the Apple logo at the company's store in Grand Central Terminal. —AP/File
A person stands near the Apple logo at the company's store in Grand Central Terminal. —AP/File
Apple Operations International, a subsidiary of Apple Inc, is seen in Hollyhill, Cork. —Reuters
Apple Operations International, a subsidiary of Apple Inc, is seen in Hollyhill, Cork. —Reuters

WASHINGTON: The White House said on Tuesday it was concerned about a European Commission order for Apple Inc to pay billions in unpaid taxes to Ireland because it seemed TO undermine joint US-EU progress on creating a more fair international tax system.

White House spokesman Josh Earnest said it was possible the EU order for Apple to pay $14.5 billion in back taxes could be unfair to US taxpayers because Apple might be able to claim it in the United States as a tax deduction.

“We are concerned about a unilateral approach ... that threaten to undermine progress that we have made collaboratively with the Europeans to make the international taxation system fair,” Earnest told a briefing.

Apple shares lose a little shine

Apple shares lost some of their shine on Tuesday after the European Union ordered the US tech giant to pay a record 13 billion euros in back taxes in Ireland.

Shares in the iPhone and iPad maker were down 0.7 per cent in late morning trading, making for a more than 3 per cent loss in the two weeks ahead of the widely-anticipated decision.

Apple has vowed to appeal the ruling, as has Ireland, which has attracted multinational firms with its low corporate tax rate and willingness to negotiate specific tax treatment.


EU order for Apple to pay $14.5bn in back taxes could be unfair to US taxpayers because Apple might be able to claim it in the United States as a tax deduction.


The European Commission concluded that Dublin had shown preferential treatment in an arrangement that allowed Apple to avoid virtually all tax on its business in the bloc, paying an effective corporate tax rate of just 0.005 per cent on its European profits in 2014.

ETX Capital analyst Neil Wilson said investors were fretting over the longer term implications rather than the size of the fine.

“For Apple and others like it, this could be a watershed,” Wilson added.

'Tough for multinationals'

“Caught between an aggressive EC and the Obama regime's clampdown on tax inversions, it's looking increasingly tough for multinationals to avoid paying the going tax rate.”

The EU has recently stepped up its campaign against its member states giving huge tax breaks to firms, last year ordering US coffee giant Starbucks and Italian automaker Fiat to each repay up to 30 million Euros in back taxes to the Netherlands and Luxembourg respectively.

Shares in other multinationals which run much of their international operations via Ireland, such as Google parent Alphabet and Facebook, also dipped.

Overall, Wall Street's main indices were down around 0.3 per cent in late morning trade. Meanwhile in Europe, shares ended mixed.

Frankfurt's DAX 30 finished up 1.1 per cent and the CAC 40 in Paris added 0.8 per cent as weak German inflation and a drop in eurozone business confidence reinforced expectations that the European Central Bank will have to step up stimulus measures.

The Economic Sentiment Indicator (ESI) for the 19-nation eurozone compiled by the European Commission fell one full point to 103.5 in August as Britain's vote to quit the European Union continued to undermine eurozone business and consumer confidence in August, holding above the boom-bust line of 100 points.

Meanwhile Germany's 12-month inflation rate dipped to 0.3 per cent in August using the ECB's methodology, an indication that its efforts to stimulate the eurozone economy and bring inflation back towards a healthier rate of just fewer than 2 per cent are not yet bearing fruit.

“The ECB has reason to increase its policy support, perhaps as soon as next week,” Jack Allen at Capital Economics wrote.

Meanwhile, London's FTSE 100 index of top blue-chip companies dipped 0.3 per cent after coming back from a long holiday weekend.

Asian equities mostly rose on Tuesday, but Tokyo ended slightly lower on tepid data and profit-taking.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

‘Source of terror’
29 Mar, 2024

‘Source of terror’

ALTHOUGH dealing with the presence of terrorist groups in Afghanistan is a major political, security and strategic...
Chipping in
29 Mar, 2024

Chipping in

FEDERAL infrastructure development schemes are located in the provinces. Most such projects — for instance,...
Toxic emitters
29 Mar, 2024

Toxic emitters

IT is concerning to note that dozens of industries have been violating environmental laws in and around Islamabad....
Judiciary’s SOS
Updated 28 Mar, 2024

Judiciary’s SOS

The ball is now in CJP Isa’s court, and he will feel pressure to take action.
Data protection
28 Mar, 2024

Data protection

WHAT do we want? Data protection laws. When do we want them? Immediately. Without delay, if we are to prevent ...
Selling humans
28 Mar, 2024

Selling humans

HUMAN traders feed off economic distress; they peddle promises of a better life to the impoverished who, mired in...