Apple may be forced to pay $19 billion in the upcoming months as the European Commission deliberates over whether the tech giant unfairly evaded taxation by establishing an agreement with Ireland and the U.K.
The EU accuses Apple of reducing its corporate tax rate by creating a deal with Ireland that would transfer its profits to the country’s subsidiaries, according to Business Insider. But the U.S. Department of Treasury and the Obama administration interpret this as another attempt by the powerful international bureaucracy to discriminate against American companies.
The Treasury Department released an extensive paper expressing that while they share the Commission’s “concern with tax avoidance by multinational firms,” they see a disturbing pattern of unjust assessments for American businesses. The federal agency contends that “The Commission’s Approach Is New and Departs from Prior EU Case Law and Commission Decisions” and conflicts with international norms that subverts the international tax system.
“The U.S. Treasury Department continues to consider potential responses should the Commission continue its present course,” the government agency concludes. “A strongly preferred and mutually beneficial outcome would be a return to the system and practice of international tax cooperation that has long fostered cross-border investment between the United States and EU Member States.”
Apple, along with other American corporations, have been investigated for its tax structures and arrangements on a number of occasions. Apple CEO Tim Cook was called before Congress in 2013 after the federal government investigated whether the company’s tax practices were legal.
Cook has defended the tech conglomerate’s fiscal policies as perfectly within the confines of the law and also completely understandable. “The tax law right now says we can keep that in Ireland or we can bring it back,” Cook told The Washington Post. “We’ve said at 40 percent, we’re not going to bring it back until there’s a fair rate. There’s no debate about it. Is that legal to do or not legal to do? It is legal to do. It is the current tax law.”
Facebook has been subpoenaed seven times by the American government for having holdings in offshore accounts in Ireland. The IRS is suspicious that Facebook undervalued its income in the U.S. to avoid a higher tax rate.
The federal government also accused Pfizer, a pharmaceutical behemoth, for trying to merge with another company in order to relocate to Ireland for a lower corporate tax rate.
The American government has blamed American companies for unfair and potentially illegal tax policies many times in the past. But this incident pits an American company–with the support of the American government–against a foreign bureaucracy.
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