The US Treasury has made no secret of its disapproval of European investigations into Apple's taxes - just as the tech giant has been slapped with the biggest tax bill ever imposed outside the US.
The Brussels-based European Commission ordered Apple to repay $14.5 billion Tuesday, after a three-year investigation found that Ireland gave the company illegal tax benefits.
But Apple will appeal, saying the Commission's figures are 'completely made-up'. CEO Tim Cook, who previously called the probe 'political c**p', hit back in a lengthy message on the company's website.
The US Treasury has also warned Brussels not to pursue American companies over tax avoidance - but McDonald's, Google and Amazon could be next.
Brussels accused Apple in a damning report published Tuesday of paying as little as 0.005 per cent tax by funneling its non-US profits through its Irish headquarters with no staff or premises, then on to its $178 billion offshore fund.
The Department Of Treasury hit out at the European Commission even before Tuesday's ruling was announced.
It released a 25-page report on last week, accusing Brussels of undermining the international tax system by straying away from international norms.
The Treasury also decried the commission's 'retroactive' investigations, saying such investigations would harm tax certainty and set an undesirable precedent in other countries.
It claimed the Commission's approach would 'undermine years of careful negotiations and compromise among OECD members'.
'The US Treasury Department continues to consider potential responses should the Commission continue its present course,' the report reads.
'A strongly preferred and mutually beneficial outcome would be a return to the system and practice of international tax cooperation that has long fostered cross-border investment between the United States and EU Member States.'
A US Treasury spokesperson told Bloomberg in a statement: 'We believe that retroactive tax assessments by the commission are unfair, contrary to well-established legal principles, and call into question the tax rules of individual Member States.
'The commission's actions could threaten to undermine foreign investment, the business climate in Europe, and the important spirit of economic partnership between the US and the EU.'
The Commission, meanwhile, denied having treated Apple differently from other companies.
'EU law applies indiscriminately to all companies operating in Europe—there is no bias against U.S. companies,' a spokeswoman for the European Commission told Reuters.
'This is very clear if we look at the facts: In October 2015 the first state aid decisions on tax rulings concerned a European company, Fiat, as well as a US company.'
The Commission's landmark report says that between 2003 and 2014 Apple paid a rock bottom Irish tax rate on most of its profits outside the US before sending it to a tax haven where it paid no tax at all. It has more than $157 billion stashed in offshore accounts.
EU Competition Commissioner Margrethe Vestager said: 'Member states cannot give tax benefits to selected companies-this is illegal under EU state aid rules.'
The EU intervention is going to cause a huge row between Brussels and Washington over tax powers.
In 2011 Apple's profits outside America were $22 billion but Ireland agreed that only $55 million were considered taxable.
The giant tax bill, which could reach $21 billion because of interest, will not be difficult for the company to pay because it made $53.4 billion last year - the biggest profit in corporate history.
HOW APPLE'S $14BN TAX BILL WILL BARELY MAKE A DENT
Annual revenue: $650bn
Annual profits: $53.4bn - around $1600 profit every second
Offshore cash fund: $53.4bn
Sales: 90m iPhones (34,000 every hour), 40m iPads, 16m MACs and 5m iWatches
Employees: 304,000 current US jobs — 70,000 employees around the world including 22,000 in Europe. It also has 257,000 jobs at 'other companies' that support its products.
But Apple executives have now accused the Commission of doing the sums wrong in calculating the jaw-dropping $14.5 million bill for unpaid tax.
It said in a statement: 'Apple follows the law and pays all of the taxes we owe wherever we operate. We will appeal and we are confident the decision will be overturned.
'Apple warned of the ramifications for future investment in Europe, where it employs 22,000 people.
'The European Commission has launched an effort to rewrite Apple's history in Europe, ignore Ireland's tax laws and up-end the international tax system in the process.
'It will have a profound and harmful effect on investment and job creation in Europe.'
The company's chief financial officer, Luca Maestri, claimed the tech giant paid $400 million in tax in 2014 in Ireland.
He claimed Competition Commissioner Margrethe Vestager's assessment that Apple paid just $55 in tax for every roughly $1 million it made that year was nonsense.
He said: 'It is a completely made-up number. We really believe that the impact of this decision will be devastating for the European economy.'
CEO Tim Cook posted a lengthy message on apple.com, warning about devastating ramifications for the sovereignty of European countries in light of the competition chief's hard line.
He said: 'In Ireland and in every country where we operate, Apple follows the law and we pay all the taxes we owe.'
Cook accused Brussels of taking unprecedented action, with serious and wide-reaching complications.
He said: '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.'
(Daily Mail)
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