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31 Aug, 2016 09:19

'Unfair' Apple fine sparks angry reaction in Washington

'Unfair' Apple fine sparks angry reaction in Washington

The United States is furious at the European Union for demanding Apple reimburse up to €13 billion in unpaid taxes in Ireland.

“This decision is awful. Slamming a company with a giant tax bill — years after the fact — sends exactly the wrong message to job creators on both sides of the Atlantic. It’s also in direct violation of many European countries’ treaty obligations. This is precisely the kind of unpredictable and heavy-handed taxation that kills jobs and opportunity,” said Speaker of the US House of Representatives Paul Ryan.

“This is a cheap money grab by the European Commission, targeting US businesses and the US tax base. By forcing their member states to retroactively impose taxes on US companies, the EU is unfairly undermining our ability to compete economically in Europe while grabbing tax revenues that should go toward investment here in the United States,” said Senator Chuck Schumer, who is expected to be the next Democratic leader.

Both senators have called for US tax reforms forcing giant companies like Apple to pay more taxes in America.

Schumer’s party colleague Carl Levin has criticized US tax authorities for letting Apple funnel tax payments into Europe.

"The IRS [US Internal Revenue Service] has failed to stake a claim for US taxes on those revenues. So Europe attempts to fill the vacuum. Shame on Apple for dodging US taxes. Shame on the IRS for failing to challenge Apple's tax avoidance,” he said. Levin chaired hearings into Apple's taxes three years ago.

There is also a possibility that US taxpayers could end up covering Apple's back taxes in Ireland.

“It’s extremely possible the US taxpayer will have to pay this bill. For every dollar in tax Apple has to repay in Ireland, they may get to reduce their US tax bill by $1,” said Stuart Gibson, a former government tax official, now editor of Tax Notes International.

EU Competition Commissioner Margrethe Vestager said it was the Senator Levin-headed hearings three years ago that inspired the watchdog to start the investigation into Apple.

"The Commission listened and decided to look deeper into the matter," Vestager said in June.

On Tuesday, the EU announced its decision after a three-year investigation into Apple’s tax deal with the Irish authorities. The probe showed that for every €1 million in profits, the US company paid just €500 in tax. A few years later, Apple was paying just €50 per million.

Both Apple and Ireland said they will appeal the decision.