WASHINGTON: The White House said on Tuesday it was concerned about a European Commission order for Apple Inc to pay billions in unpaid taxes to Ireland because it seemed TO undermine joint US-EU progress on creating a more fair international tax system.
White House spokesman Josh Earnest said it was possible the EU order for Apple to pay $14.5 billion in back taxes could be unfair to US taxpayers because Apple might be able to claim it in the United States as a tax deduction.
“We are concerned about a unilateral approach … that threaten to undermine progress that we have made collaboratively with the Europeans to make the international taxation system fair,” Earnest told a briefing.
Apple shares lose a little shine
Apple shares lost some of their shine on Tuesday after the European Union ordered the US tech giant to pay a record 13 billion euros in back taxes in Ireland.
Shares in the iPhone and iPad maker were down 0.7 per cent in late morning trading, making for a more than 3 per cent loss in the two weeks ahead of the widely-anticipated decision.
Apple has vowed to appeal the ruling, as has Ireland, which has attracted multinational firms with its low corporate tax rate and willingness to negotiate specific tax treatment.
EU order for Apple to pay $14.5bn in back taxes could be unfair to US taxpayers because Apple might be able to claim it in the United States as a tax deduction.
The European Commission concluded that Dublin had shown preferential treatment in an arrangement that allowed Apple to avoid virtually all tax on its business in the bloc, paying an effective corporate tax rate of just 0.005 per cent on its European profits in 2014.
ETX Capital analyst Neil Wilson said investors were fretting over the longer term implications rather than the size of the fine.
“For Apple and others like it, this could be a watershed,” Wilson added.
‘Tough for multinationals’
“Caught between an aggressive EC and the Obama regime’s clampdown on tax inversions, it’s looking increasingly tough for multinationals to avoid paying the going tax rate.”
The EU has recently stepped up its campaign against its member states giving huge tax breaks to firms, last year ordering US coffee giant Starbucks and Italian automaker Fiat to each repay up to 30 million Euros in back taxes to the Netherlands and Luxembourg respectively.
Shares in other multinationals which run much of their international operations via Ireland, such as Google parent Alphabet and Facebook, also dipped.
Overall, Wall Street’s main indices were down around 0.3 per cent in late morning trade. Meanwhile in Europe, shares ended mixed.
Frankfurt’s DAX 30 finished up 1.1 per cent and the CAC 40 in Paris added 0.8 per cent as weak German inflation and a drop in eurozone business confidence reinforced expectations that the European Central Bank will have to step up stimulus measures.
The Economic Sentiment Indicator (ESI) for the 19-nation eurozone compiled by the European Commission fell one full point to 103.5 in August as Britain’s vote to quit the European Union continued to undermine eurozone business and consumer confidence in August, holding above the boom-bust line of 100 points.
Meanwhile Germany’s 12-month inflation rate dipped to 0.3 per cent in August using the ECB’s methodology, an indication that its efforts to stimulate the eurozone economy and bring inflation back towards a healthier rate of just fewer than 2 per cent are not yet bearing fruit.
“The ECB has reason to increase its policy support, perhaps as soon as next week,” Jack Allen at Capital Economics wrote.
Meanwhile, London’s FTSE 100 index of top blue-chip companies dipped 0.3 per cent after coming back from a long holiday weekend.
Asian equities mostly rose on Tuesday, but Tokyo ended slightly lower on tepid data and profit-taking.