June 11 - Apple Inc. is in the probing eye of the EU investigation into European tax deals in Ireland and other member states, along with Starbucks and Fiat. Is too little tax being paid by foreign corporations domiciled in Europe? Joel Flynn reports.
▲ Hide Transcript
▶ View Transcript
They say two things in life are certain: death and taxes.
Well Apple, Starbucks and Fiat could be about to prove that wrong.
They're being investigated by the European Commission for tax avoidance.
Favourable deals in Ireland, Luxembourg and the Netherlands have seen all three companies save billions - and that's something EU Competition Chief Joaquin Almunia says is unfair.
SOUNDBITE: European Union Competition Chief, Joaquin Almunia, saying (English):
"Selective tax advantages to the benefit of multinationals distort competition seriously in our single markets. Moreover, when public budgets are tight, and citizens are asked to make efforts to deal with the consequences of the crisis, it cannot be accepted that large multinationals do not pay their fair share in taxes.''
The investigation could send tremors through Europe - and not just in the countries involved.
The Commission's allegation is that the favourable deals in the three countries are actually "state aid", but they're also fundamental parts of the business models of the countries.
Forcing them to change tax laws could make others in Europe unhappy.
That's according to Reuters' Tom Bergin.
SOUNDBITE: Reuters journalist and tax expert, Tom Bergin, saying (English):
"It could find itself up against some very strong political opposition not just from those three countries but actually from larger countries, not least the UK, so even the countries that are technically victims of this kind of tax avoidance actually some of them don't want the EU to tackle the problem in the most strident way because that goes against their philosophical approach of the European Union."
The move follows a global trend to press companies into revealing how they avoid tax.
A U.S. Senate committee found last year that Apple had protected tens of billions of dollars in profits from tax by using Irish companies that had no tax residence anywhere.
It only paid 3.7 percent tax on money made outside the U.S. last year.
Apple says it hasn't had selective treatment, while the Irish government said it's confident it hasn't broken any rules as well.