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U.S., EU officials downplay risk of “tax war”

DUBLIN (Reuters) – Senior U.S. and EU officials on Thursday played down the risk that probes into U.S. firms’ tax dealings could lead to a trans-Atlantic tax war, saying both sides were engaging closely to avoid an escalation.

The United States Treasury Department has accused European Union antitrust officials of singling out U.S. companies like Apple and Amazon in a series of probes into tax deals with European governments.

The Treasury Department has said it is looking at a never-used statute that would allow it to double U.S. taxes on EU firms and individuals in retaliation for discriminatory taxes.

But officials from both sides said there was a long way to go before such measures might actually be used.

“I don’t see a risk of a tax war,” said Robert Stack, Deputy Assistant Secretary for International Tax Affairs at the U.S. Department of the Treasury, speaking to journalists at a tax conference in Dublin.

Asked about the 1934 statute that would allow the United States to retaliate, he said his department was simply looking at it and was not preparing to use it.

“We have simply told in a letter back to our Congress that we will have a look at it. That’s all we are saying. Full stop.”

EU antitrust chief Margrethe Vestager in February rejected Stack’s earlier criticism that the EU had no right to go after foreign profits held overseas by the firms, and signalled the probes against Apple, Starbucks and McDonald’s would continue.

All the companies have denied wrongdoing. Apple could face a hefty back-tax bill as the EU investigation covers a period of up to 10 years.

European Commission tax director Valere Moutarlier, speaking at the same conference, said there was a healthy dialogue between the two sides, and no sign of things escalating.

“People know each other, people talk to each other. I do not anticipate a war,” he told Reuters when asked about possible U.S. retaliation. “I am not sure that in reality we are close to being up in arms.”

Moutarlier described the current environment as “over-politicized” but he said he was hopeful that this would not last long, adding that all sides should wait for the rulings before reacting.

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Meet Paul Raymond

Meet Paul Raymond

Mr. Raymond is a sought after speaker in tax controversy law by many attorney, accountant, and business groups and at the request of the Internal Revenue Service, has presented programs at the IRS Nationwide Tax Forum, attended by tax professionals throughout the United States.

Additionally, he continues to be an active member in the Section of Taxation, American Bar Association, where he was the Past Chair of the Employment Taxes Committee.

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