European Commission Opens Probes On Tax Practices Of Apple, Starbucks

(RTTNews) - The European Commission said Wednesday that it has opened three in-depth probes to examine whether decisions by tax authorities in Ireland, The Netherlands and Luxembourg with regard to the corporate income tax to be paid by Apple Inc. (AAPL), Starbucks Corp. (SBUX) and Fiat Finance and Trade, respectively, comply with the European Union rules on state aid.

European Commission Vice President in charge of competition policy Joaquín Almunia said, "In the current context of tight public budgets, it is particularly important that large multinationals pay their fair share of taxes. Under the EU's state aid rules, national authorities cannot take measures allowing certain companies to pay less tax than they should if the tax rules of the Member State were applied in a fair and non-discriminatory way."

The Commission has been investigating under EU state aid rules certain tax practices in several member states following media reports alleging that some companies have received significant tax reductions by way of "tax rulings" issued by national tax authorities.

Tax rulings are used in particular to confirm transfer pricing arrangements. Transfer pricing influences the allocation of taxable profit between subsidiaries of a group located in different countries.

The Commission noted that it is looking at the compliance with EU state aid rules of certain tax practices in some member states in the context of aggressive tax planning by multinationals, with a view to ensure a level playing field. A number of multinational companies are using tax planning strategies to reduce their global tax burden, by taking advantage of the technicalities of tax systems, and substantially reducing their tax liabilities.