EC criticised for targeting US companies over tax avoidance

EC criticised for targeting US companies over tax avoidance

The European Commission has been criticised by the US Treasury Department over its investigations into American companies' alleged tax avoidance, the BBC has reported.

The EC is investigating tax deals granted to US companies for setting up headquarters in Europe, including Amazon in Luxembourg and Apple in Ireland. Early last year, a preliminary finding from the EC revealed that Luxembourg provided “state aid” to Amazon through its tax arrangements for the company. However, Amazon argued that it abides by the same tax rules as other companies in Luxembourg.

Next month, the EU is expected to deliver its verdict on Apple, which has been accused of receiving special tax benefits from the Republic of Ireland that were not granted to other companies. JP Morgan, an investment banker for Apple, has said the company could face a bill for $19bn (£14.3bn) in a worst-case scenario.

In a report published yesterday (24th August), the US Treasury claimed that Brussels was using a different set of criteria to judge cases involving US companies and that the potential penalties are “deeply troubling”. The report also accused the EC of trying to become a “supranational tax authority”.

The EC said there was “no bias against US companies” in the probes.

Robert Stack, a Treasury Department deputy wrote in a blog on the agency's website that a charge from the EC could be considered a foreign tax credit in the US, which could see the businesses' tax bills reduced in the US.

In June last year, the European Commission also opened a formal antitrust investigation into the way Amazon distributes e-books and its relationship with publishers.