Corporate America’s most powerful chief executives are rallying to Apple’s side in its EU tax battle, appealing directly to European heads of government to overturn Brussels’ demand for billions of euro from the tech group.
In a bold move a group of 185 American CEOs has urged the leaders of 28 EU states to stop the European Commission from claiming €13 billion in underpaid taxes from Apple, calling the attempt a "grievous self-inflicted wound".
The call for national governments to intervene – contained in letters sent to leaders by the Business Roundtable on Thursday – marks an escalation in US attacks on the commission, whose decision has already been slammed as "political crap" by Apple boss Tim Cook.
The corporate chiefs, who are grappling with uncertainty over the outcome of the US election at home, warn that the commission’s decision threatens to scare away investment by legitimising abrupt reversals of government policy overseas.
The commission this month sparked a transatlantic feud by ordering Ireland to claw back up to €13 billion from Apple, arguing that the favourable tax arrangements the company devised with Ireland constituted illegal state aid between 2003 and 2014.
In “exceptional circumstances” EU states have the power to override commission decisions on illegal state aid. However, such an intervention is unprecedented and highly unlikely in the Apple case because it requires unanimity between all 28 EU states.
Many EU countries back the €13 billion tax ruling; Michel Sapin, France's finance minister, called the decision "entirely legitimate".
Margrethe Vestager, the EU’s competition commissioner, has said Apple should have realised it had a tax deal that was “too good to be true” and has dismissed claims that she acted retrospectively to change Irish law.
“The state aid rules apply since 1958,” she said. “It has never been a secret that tax exemptions could be state aid, and that, if so, they’d have to be paid back. The only secrets were the tax rulings themselves.”
In a letter to German chancellor Angela Merkel seen by the Financial Times, the Business Roundtable said: "In the interest of all countries that respect the rule of law, this decision must not be allowed to stand."
If upheld the decision would set a precedent that undermines the legal certainty businesses need to make large-scale investments, the letter warns, saying that Brussels’ move is “a grievous self-inflicted wound for the European Union and its citizens”.
“Absent [a] reversal, other countries outside the EU will interpret the decision as acceptable governmental behaviour and will put all companies with cross-border investments – including EU-headquartered companies – at risk of having their assets expropriated by foreign governments seeking extra revenue or seeking to punish a successful foreign competitor.”
The Business Roundtable is chaired by Doug Oberhelman, chief executive of Caterpillar, and its vice-chairs are the leaders of Xerox, Honeywell, Lockheed Martin and Dow Chemical. Apple's Mr Cook is not part of the group, but other members include the heads of Walmart, ExxonMobil, AT&T, GE and JPMorgan.
By wading into the sensitive realm of ties between Brussels and EU states, the corporate chiefs are following in the footsteps of the Obama administration, which has been sharply critical of the commission and accused it of behaving like a “supranational tax authority”.
The letter to Ms Merkel says: “I urge you to work with your colleagues to overturn this decision and seek an end to the use of state aid investigations that override the ability of your country and other EU member states to determine and interpret their own tax laws.”
The group’s message also echoes many of the arguments made by Apple executives in the aftermath of last month’s decision.
"The ruling threatens to seriously undermine the sovereignty of EU member states over their own tax matters and the rule of law," Apple finance chief Luca Maestri told reporters on the day the decision was revealed. "The impact of this decision will be devastating for the European economy." – Copyright The Financial Times Limited 2016