EU tax probe targets Apple, Starbucks, Fiat Finance

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Brussels - The European Commission had opened in-depth investigations into tax decisions affecting Apple, Starbucks and Fiat Finance and Trade in Ireland, the Netherlands and Luxembourg, it said yesterday.

The probes focused on if decisions by authorities in the member states about corporate tax to be paid by the companies complied with state aid rules.

Corporate tax avoidance has risen to the top of the international political agenda in recent years amid reports of how firms like Apple and Google used convoluted structures to slash their tax bills.

The EU said its investigation followed reports that some companies had received significant tax reductions through rulings by national authorities.

Apple said that it had not received any selective tax treatment from the Irish authorities, while the government said it was confident that it had not breached state aid rules and would defend itself vigorously.

Fiat declined to comment and Starbucks was not available for comment.

Starbucks told a UK parliamentary investigation in 2012 that it received a tax deal in the Netherlands which allowed it to enjoy a “very low” tax rate, while a US Senate probe last year revealed that Apple sheltered tens of billions of dollars in profits from tax by using Irish firms that had no tax residence anywhere.

Apple in the US entered into deals with Irish subsidiaries where these units received rights to certain intellectual property licensed to other group firms, helping ensure almost no tax was reported in countries like Britain or France.

Apple’s Irish arrangement helped it achieve an effective tax rate of 3.7 percent on its non-US income last year, its annual report showed – a fraction of the prevailing rates in its main overseas markets.

Tax rulings were used to confirm transfer pricing arrangements, covering prices charged for transactions between various parts of the same group. The Group of 20 leading nations launched a drive to develop new rules to tackle abusive transfer pricing and other forms of corporate profit shifting. – Reuters

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