U.S. Criticizes EU on Corporate Tax Probes

The U.S. Treasury Department released a sharp critique of the European Commission's investigation of corporate tax breaks as EU officials near the end of their inquiry into Apple Inc.'s arrangements with Ireland.

In a 25-page paper released Wednesday, the Treasury elaborated on arguments it has been making all year. The U.S. contends that the EU has made an "unforeseeable departure from the status quo" and is acting inconsistent with international tax norms.

"The Commission is charting a course that sets aside years of multilateral efforts" on tax avoidance, Treasury wrote. "The Commission's path runs the risk of the EU being perceived as having used its unique structure to undermine and reverse international progress."

EU officials have said repeatedly that they are merely following their own laws against unfair competition, which require them to recover improper "state aid" to companies in the form of selective tax breaks provided by EU member countries.

Treasury's statements came as Apple awaits a decision in the probe of its tax affairs in Ireland. Irish Finance Minister Michael Noonan has said he expects a ruling in September or October.

In response to the Treasury report, a European Commission spokeswoman said Wednesday that it is following a "standard feature" of EU law and applying it indiscriminately against companies regardless of where they are from. The spokeswoman said officials remain "available to offer all necessary further clarifications" to the U.S.

Those explanations haven't satisfied U.S. officials, and the two sides have held meetings and exchanged letters throughout the year without resolving the dispute. Treasury's white paper said the government "continues to consider potential responses." U.S. lawmakers have threatened to invoke an obscure section of the tax code that allows retaliatory double taxation.

U.S. companies whose tax practices have been investigated include Apple, Amazon.com Inc. and Starbucks Corp. Non-U. S. companies also have faced review.

U.S. officials also see a potential risk to the federal budget. Under current law, U.S. companies owe U.S. taxes on the profits they earn around the world and get tax credits for payments to foreign governments. To the extent they pay more in Europe, they would pay less to the U.S. when they repatriate the money or when Congress imposes a mandatory tax on their stockpiled foreign profits.

Nick Timiraos and Natalia Drozdiak contributed to this article.

Write to Richard Rubin at [e-mail]

(END) Dow Jones Newswires

August 24, 2016 14:15 ET (18:15 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.