US warns Europe over Apple tax probe

The US has warned the European Commission about demanding billions of dollars over tax avoidance allegations against Apple and other American multinationals.

The US Treasury department said on Wednesday that Brussels was becoming a “supranational tax authority”overriding international agreements on tax reform of its member states.

It also said that Europe was discriminating against US companies as they are using a different set of criteria. The EC denied it was showing bias against US companies in its investigations.

The EC is investigating tax deals granted to US companies for setting up offices in Europe. The commission is set to investigate into an alleged sweetheart tax deal, which Ireland gave technology giant Apple but did not grant to other companies, potentially violating EU state aid rules. A ruling is expected in September.

Apple have said it does not have any special tax deal with the Irish government.

The company came under criticism in the US senate for paying 2% in corporation tax in Ireland. JP Morgan, the investment banker for Apple, said the company could pay about £19bn in back-taxes in a worst case scenario.

The investigation is due to a crackdown in alleged tax evasion as several multinationals such as Amazon and Starbucks are also being investigated by the EC. In 2015 the EC ruled that Starbucks and Fiat were given sweetheart tax deals in the Netherlands.

Robert Stack, a deputy in the US Treasury department, said: "The investigations have global implications as well for the international tax system and the G20's agenda to combat [tax avoidance] while improving tax certainty to fuel growth and investment.”

The US Treasury Department said it was considering potential responses if the EC continues its present course about international tax agreements.