EU accused of targeting US firms in fiscal deals crackdown

A senior US tax official accused the European Union of unfairly targeting American companies in its crackdown on fiscal deals that has embroiled firms from Apple to McDonald's.

Robert Stack, deputy assistant secretary for international tax affairs in the US treasury said following meetings with EU regulators he is concerned that EU competition commissioner Margrethe Vestager has placed US companies under a disproportionate spotlight in her sprawling inquiry into multinational conglomerates' tax deals.

The warning comes a day after Ms Vestager signalled she is willing to add Google parent Alphabet's £130 million tax deal with the UK to her growing list of investigations.

Despite inquiries into Apple, Amazon. com, McDonald's and Starbucks, Ms Vestager insists she is not focusing just on American companies. The inquiry has also completed an investigation into Fiat Chrysler.

Earlier this month she announced an inquiry into Belgian deals with mainly European firms.

“While in the Starbucks case, the sums were relatively modest, €20 million to €30 million, they may be substantially larger, perhaps in the billions in other cases,” Mr Stack said. “The retroactive application of these new approaches calls into question the basic fairness of these proceedings.”

The commission declined to comment on the outcome of the meeting, which Ms Vestager didn’t attend. The inquiries follow years, if not decades, of disjointed EU fiscal policy where different countries had wide latitude to set their own tax rates

“We’re concerned that the EU commission is, in effect, telling member states how they should have applied their own tax laws over a 10-year period,” Mr Stack said.

US lawmakers have also weighed in over the EU’s attempt to rein in tax deals that it says may amount to unfair state aid.

The top members of the Senate finance committee, the panel in charge of writing tax code, wrote a letter to US treasury secretary Jack Lew this month urging him to lobby European regulators against imposing a penalty on Apple and other US companies that have been caught up in an wide-ranging investigation into tax avoidance.

“We are greatly concerned that the EU commission is reaching out to tax income that no member state has the right to tax under internationally accepted standards,” Mr Stack said. “The mere fact that the US system has left these amounts untaxed until repatriated, does not provide under international tax standards a right for another jurisdiction to tax those amounts.”

– (Bloomberg)