US treasury secretary Jacob Lew is set to meet with European Union antitrust chief Margrethe Vestager on Wednesday as she prepares to deliver a final verdict on a probe into Apple's tax affairs in Ireland.
The showdown comes days after Ms Vestager's team came up with two possible scenarios on how much tax Apple owes in Ireland, Bloomberg reported on Tuesday, citing sources. Mr Lew has contacted Vestager urging her to avoid ordering any collection of back taxes from Apple, it said.
Conflict over trans-Atlantic tax practices escalated in February as Mr Lew complained to European Commission president Jean-Claude Juncker that US firms are unfair targets of state- aid investigations. The treasury secretary's letter came after EU enforcement focused on fiscal pacts Apple, Amazon. com and McDonald's have with Ireland and Luxembourg. The companies all say they acted within the law.
Ms Vestager has repeatedly denied she's deliberately taking aim at US firms, insisting that probes into tax rulings are part of the watchdog's responsibility to police fair competition within the EU. Clawing back undue advantages - as was the case when Starbucks was ordered to pay as much as €30 million in back taxes to the Netherlands - simply restores equal treatment, she insists.
The commission's press office and the Treasury Department didn't comment beyond confirming the Brussels meeting on Wednesday. Apple declined to comment.
The EU opened the Apple probe in 2014, and, in preliminary findings, said its tax arrangements were improperly designed to give the company a financial boost in exchange for jobs in Ireland. The Irish government has said it will “vigorously defend’’ any adverse Apple tax decision.
Minister for Finance Michael Noonan said last month the EU decision could come as soon as July, though he also suggested that the UK vote to quit the EU may trigger delays. The Department of Finance couldn't immediately comment on timing.
In a worst-case scenario, Apple may face a $19 billion bill if the government ultimately loses and is forced to recoup tax from the company, according to JPMorgan analyst Rod Hall. However, Brussels lawyers speculate that the final amount could be much less, in the hundreds of millions range - large enough to send a message to companies like Apple and the countries that dole out tax breaks, but not too large to risk creating havoc in case the decisions get overturned in the EU courts.