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US and Europe may collide on taxing Apple, Amazon

The European Commission billed Amazon for $293 million in unpaid taxes in Luxembourg last week

Photo: Reuters
Amazon
Patricia Cohen | NYT
Last Updated : Oct 16 2017 | 1:28 AM IST
Congressional lawmakers are not the only ones interested in collecting taxes on global profits that American corporations are hoarding overseas. European regulators, knee deep in a campaign to stamp out tax avoidance, have their own plans for that money.

Last week, for instance, the European Commission billed Amazon for $293 million in unpaid taxes in Luxembourg, arguing that the country’s failure to collect the tax amounted to an illegal state subsidy. It also took Ireland to court for not following up on the $15.2 billion tax bill imposed on Apple last year.

“The Europeans are targeting US dollars overseas that the US believes should be taxed here,” said Dave Camp, a former Republican representative from Michigan who was chairman of the House Ways and Means Committee and the author of an unsuccessful tax overhaul in 2014. “We have to address this problem before the Europeans get there first.”

The rulings on Amazon and Apple — which those companies are disputing — are byproducts of a race among governments to lure corporate giants to their shores in the hunt for new sources of revenue. That cutthroat competition is the reason that 73 per cent of Fortune 500 companies have a subsidiary in a low-tax haven, according to the Institute on Taxation and Economic Policy.

That rivalry has the potential to fuel tensions between the United States and its allies. Yet it could turn out that the European crackdown on American multinationals will ultimately help — rather than hobble —Washington’s efforts to get them to pay up. The harder that other countries make it for American companies to take advantage of tax havens and sweetheart deals abroad, the weaker the incentives are for businesses to stash money out of the reach of the Internal Revenue Service.
©2017 The New York Times News Service
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