The European Commission announced it was probing tax break deals that Ireland, Netherlands and Luxembourg have struck with Apple, Starbucks and Fiat.
The EU said it was investigating whether the countries’ tax deals in favor of international companies, which boost investment and job creation that may otherwise be directed into the markets these companies target, amount to unfair advantage.
The side-stepping of tax by corporates has attracted political concerns on the world stage lately, as firms such a Google and Apple utilize twisted structures to cut their tax costs.
“In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes,” Joaquin Almunia, EU vice president responsible for competition is quoted by Reuters as saying on Wednesday.
Governments have said they will revise regulations that touch on international tax, although experts caution that it’s not going to be easy for the EU to argue against agreements reached with Ireland, Luxembourg and Netherlands under existing rules.
Apple said on Wednesday it’s not been accorded any preferential tax treatment by Ireland. Starbucks said it adhered to all tax requirements while Fiat did not comment.
The Irish government insisted it has not violated state aid rules and will defend its policy strongly.
The EU said it was scrutinizing transfer pricing approved by tax authorities in Ireland, Luxembourg and Netherlands, which made it possible for companies to cut their tax bills, to see if there were any exemptions and whether unfair incentives were offered.
According to Bloomberg, the EU commenced the collection of information on deals between Apple and Ireland, Starbuck and the Netherlands and Fiat and Luxembourg in 2013, after reports emerged implying some firms received substantial tax cuts.
Almunia said the EU needed to combat aggressive tax structures. It wasn’t yet possible to estimate possible recovery if parties are found to have breached tax rulings, he added.
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