After the US Senate found out that Apple paid little or no corporate tax on at least $74 billion in revenue over the previous four years, mostly by exploiting a loophole in the Irish tax code, the taxation of multinational corporations is under the spotlight.
Can that be considered state backing or breaching of the EU’s state aid rules?
The US Senate didn’t find anything illegal either. Apple refused to comment and insisted they comply with the law.
Dublin, which is struggling to recover from a deep economic crisis and is obviously concerned about its reputation in the markets, firmly denies it.
Be as it may, Tim Cook’s giant has amassed tons of billions of cash overseas and prefers to fund share buybacks and acquisitions with debt rather than face massive tax bills to repatriate the money.
So there are loopholes. What should be done to make multinationals pay their taxes in each country?
“The problem with the taxation of multinationals (not only the technological ones) is difficult to tackle because it will only be solved by means of serious investigations about the transfer prices and the debt structure of these firms, which is really difficult,” Spanish tax expert and member of the board of NH Hotels Ramón Lanau explains to The Corner.
For Mr Lanau this probe should be handled not only at the EU level but also at the OECD level. The OECD is working on measures to tackle this issue and its initial proposals are expected to be released later this year.
“We shouldn’t allow that some countries take advantage of this to start unfair competition practices. It is one thing for each country to have different tax rates –which I consider completely legitimate, and it is quite another legislating to allow multinationals to relocate their production or their corporate headquarters. Of course this issue raises the hackles, but it is obvious that it cannot be fought from a single country,” he says.
Should the EC finds Ireland guilty, the country will appeal to the European Court of Justice and the process could take up to five years.