Leaders of the largest U.S. companies united to convince the EU government to abolish the €13 billion tax claim against Apple saying that it will seriously harm EU economy and the relationships between the countries.
The letter was sent by the Roundtable, a group including CEOs of the most powerful American companies such as JPMorgan (NYSE: JPMorgan Chase & Co [JPM]), GE (Milan Stock Exchange: Gefran [GE]), Walmart (XETRA: Wal-Mart Stores [WMT]), Caterpillar (NYSE: Caterpillar [CAT]) and others. The corporate leaders criticized Brussels' decision forcing Apple to pay back 'unpaid' taxes for the amount of €13 billion (about $14.5 billion). The European Commission claimed that Ireland, the country where Apple's European headquarters is located, gave preferential tax treatment to Apple (NASDAQ: Apple [AAPL]) by illegally reducing the size of the company's tax bill for over 10 years, reported Bloomberg.
Margrethe Vestager, the EU Competition Commissioner, said that Apple has been closing eyes on this problem for years, not noticing obviously favorable tax conditions.
Irish tax rulings to Apple are illegal state aid. Effective taxation as low as 0,005 pct. #Apple has to repay up to €13 billion unpaid tax.— Margrethe Vestager (@vestager) August 30, 2016
Vestager told the Financial Times that it was no secret that Apple's tax reduction was related to state aid, that she mentions in this tweet, and the state aid money should be always paid back.
“If my effective tax rate would be 0.05 percent falling to 0.005 percent -- I would have felt that maybe I should have a second look at my tax bill,” she told journalists, as reported by Bloomberg.
So, this is exactly what the American CEOs are unhappy with. In their letter to Merkel discussed by the Financial Times, they ask the EU state governments to intervene in the lawsuit against Apple, saying that it can significantly spoil the relationships between the American and European businesses as well as affect the EU economy as a whole. They say that Apple's example will scare away many potential investors from the U.S. because of the differences in interpreting tax laws in the countries.
"Beyond the obvious targeting of Apple, the most profound and harmful effect of this ruling will be on investment and job creation in Europe. Using the Commission’s theory, every company in Ireland and across Europe is suddenly at risk of being subjected to taxes under laws that never existed," wrote Tim Cook in his letter addressing Apple community in Europe.
However, what the Roundtable group is asking for is quite tricky to implement. In order to overturn the decision of the EU commission, all 28 members of the European Union need to support the claim. If even one of them declines, the decision will remain the same. This issue has already sparked a big discussion among the EU members and Brussels.
Ireland is strongly declining that they gave "favourable tax treatment to Apple" or received any state aid, says the official website of Ireland's government. However, Brussels has the power to overrule Ireland's position in this case, what only additionally heats up the complicated relationships between the member states and Brussels government.
According to FT, the decision on Apple is unlikely to be dropped as several EU members have already announced their approval of charging Apple for "illegal tax bills".
Anyway, the bold move of the American CEOs will definitely not go unnoticed by the European Commission and add even more pressure to Apple's tax penalty discussion.
“People in leadership positions in several countries tell me that this is the agenda. I don’t know where that comes from. But what I feel strongly about is that this decision was politically based, of that I’m very confident. There is no reason for it in fact or in law.”
Tim Cook called the entire discussion around his company's tax fine "a total political crap".