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Monday, February 15, 2016, Falgun 3, 1422 BS, Jamadiul Awwal 4, 1437 Hijri

Tax conflict splits US, EU over Apple, McDonald's probes
Published :Monday, 15 February, 2016,  Time : 12:00 AM  View Count : 17

WASHINGTON, Feb 14: Conflict over trans-Atlantic tax practices escalated this week as Treasury Secretary Jack Lew complained to European Commission President Jean-Claude Juncker that American firms are unfair targets of state-aid investigations.
Lew wrote Juncker on Thursday saying the tax probes are hurting international efforts to crack down on corporate tax evasion. He said European Union inquiries are creating "disturbing international tax precedents" and seem to target US-based firms without sufficient justification. The letter raises the US concerns to a higher level, building on previous comments from a senior Treasury tax official.
The EU is pursuing investigations of member nations' tax arrangements with companies including Apple and McDonald's. The commission "appears to be adopting an entirely new legal theory and applying it retroactively in a broad and sweeping manner," Lew said in the letter. "We respectfully urge you to reconsider pursuing these unilateral actions and instead focus on our collective work."
Lew said the United States already is working to stamp out the practice of American companies moving their revenues overseas to avoid paying taxes at home. At the same time, "well-established international tax standards" don't give the EU a right to increase levies, his letter said.
"US multinationals generally do not conduct the cutting- edge research and development that creates substantial value in the European Union, and as a result, comparatively little of their income is attributable to their European operations," Lew said.
Apple, McDonald's and Starbucks are already subject to EU investigations, and EU Competition Commissioner Margrethe Vestager last month signalled she's willing to add Google parent Alphabet's recent 130 million-pound ($188m) tax deal with the UK to her growing list of investigations. At the same time, the EU has maintained it's not singling out US-based corporate titans.
In response to Lew's letter, the Brussels-based commission insisted its actions aren't targeted and are in line with the bloc's longstanding principles. "EU law applies indiscriminately to all companies operating in Europe - there is absolutely no bias against US companies," the EU's executive arm said.
Vestager last month announced a probe into Belgian pacts with mainly European firms, seeking to recover as much as 700 million euros ($793m) in tax breaks for at least 35 companies, including Anheuser-Busch InBev and BP. Responding to Lew's letter, the commission said its tax-ruling decisions have so far mostly sought to recoup taxes from European companies.    ?The Washington Post

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