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In the Wake of Apple's Testimony, EU Officials want to talk about Loopholes

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In the Wake of Apple's Testimony, EU Officials want to talk about Loopholes
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It appears that the issue of multinational corporate taxation isn’t going to die. In fact, the fire has been fueled and it’s growing.

What was supposed to be a four-hour summit to discuss energy policy will now be a discussion among European leaders about tax avoidance tactics taken by Apple (NASDAQ: AAPL), Google (NASDAQ: GOOG) Amazon (NASDAQ: AMZN), and Starbucks (NASDAQ: SBUX).

Apparently, it’s only United States businesses that are smart enough to pull it off but that aside, European officials estimate that $1 trillion euros are lost to tax evasion or avoidance polices each year and they want their money.

Apple’s tax burden optimization practices were put on display for the world yesterday which led to reports that the British unit of Amazon had 2012 revenues of $6.5 billion but only paid $3.7 million in taxes. Then, came new revelations against Google and Starbucks.

"A lot of these revenues (from the digital economy) are not getting taxed," said a French diplomat and reported by Reuters.

The meeting is only three hours and little preparation on the part of individual EU countries has taken place. This meeting is mostly to agree to be officially upset over the matter.

"Work will be carried forward as regards the Commission's recommendations on aggressive tax planning and profit shifting," Reuters read.

But, in fact, Europe has seen this as a problem about as long as the United States. There are plenty of European lobbyists that want tax law reform but little has been done. The reason might be competitive.

Small nations that want to attract big business investments are assuming that it will increase their tax base and create new jobs. Because of that competitiveness, nations like Ireland don’t want to see a standardized policy and risk losing its tax haven status.

But EU leaders don’t like the idea of leaving each nation to craft their own policies. “Uncoordinated attempts by individual countries or blocs of countries to tackle the issue may actually create more tax 'loopholes' or have a detrimental impact on businesses that do not engage in aggressive tax planning,” said Ben Jones, of Eversheds, a global tax firm.

France already went after Google in 2011 and forced it to pay 1.7 billion euros in back taxes and a similar issue with the company has arisen in Britain.

Disclosure: At the time of this writing, Tim Parker had no position in any of the mentioned equities.

Posted-In: Earnings News Politics Management Events Global Econ #s Tech Best of Benzinga

 

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