Apple faces huge Irish tax payout in EU case

The European Union is expected to order Apple on Tuesday to pay billions of euros in back taxes in Ireland in one of its largest such cases after ruling that sweetheart tax deals for the US tech giant were illegal.

The bloc's competition watchdog, Margrethe Vestager, will hold a press conference at 1000 GMT in which sources told AFP she is set to announce the European Commission's findings on the case.

Brussels launched an inquiry three years ago into tax breaks that Ireland offered iPhone-maker Apple, in one of a series of anti-trust cases targeting major US corporations that have angered Washington.

A European source speaking on condition of anonymity said they "understand it could be billions" that Apple is expected to repay.

Apple and Ireland are both expected to appeal against any decision which rules that the highly competitive tax breaks that Dublin offered to the Silicon Valley giant amounted to illegal state aid.

Apple has had a base at the southern city of Cork since 1980 and employs 5,000 people in Ireland, through which it routes its international sales, avoiding billions in corporation taxes.

Apple CEO Tim Cook, in a Washington Post interview published August 13, said he hoped to "get a fair hearing" on the matter.

"If we don't, then we would obviously appeal it," he added.

- 'No bias against US' -

The US stepped up its fight last Wednesday against the commission's crackdown on tax avoidance by Apple and other multinational companies, accusing it of unilateralism and overstepping its mandate.

In a white paper, the US Treasury said the commission probe into alleged special tax treatment that certain EU countries gave Apple, Amazon, Starbucks and Fiat Chrysler "undermines the international tax system."

The EU has made taxes a core issue since the LuxLeaks scandal in which it was revealed that European Commission President Jean-Claude Juncker's native Luxembourg gave companies huge tax breaks while he was prime minister.

In October Brussels ordered US coffee giant Starbucks and Italian automaker Fiat to each repay up to 30 million euros ($34 million) in back taxes to the Netherlands and Luxembourg respectively.

But the Apple case is set to dwarf those by the virtue of the company's huge turnover.

A US Treasury spokeswoman declined to comment on a possible ruling Tuesday from the commission.

The US has acknowledged the problems around the issue of multinational firms obtaining state aid, in the form of secret and extremely lucrative tax breaks, from Ireland, Belgium and Luxembourg for setting up business in those countries.

But it said those deals were made under international treaties and accepted tax practices. 

Last week the European Commission denied it was targeting US companies in particular and said that EU rules do not allow national tax authorities to give tax breaks to some companies that are not available to others.

"There is no bias against US companies," it said in a statement.

Washington has also expressed concern about EU anti-trust cases targeting tech giant Google alleging that it has unfairly suppressed competition.

Source: AFP