As is already known, Apple's Irish arrangement helped it achieve an effective tax rate of just 3.7 percent on its non-U.S. income last year, its annual report shows – a fraction of the prevailing rates in its main overseas markets. The Group of 20 leading nations has launched a drive to develop new rules to tackle abusive transfer pricing and other forms of corporate profit shifting. Today, the European Commission stated that it had opened three new in-depth investigations into tax decisions affecting Apple, Starbucks and Fiat Finance and Trade in Ireland, the Netherlands and Luxembourg respectively.
The probes focus on whether decisions by authorities in the three European Union member states about corporate tax to be paid by the three companies comply with state aid rules.
Corporate tax avoidance has risen to the top of the international political agenda in recent years amid reports of how companies like Apple and Google use convoluted structures to slash their tax bills.
The EU said its investigation follows reports some companies have received significant tax reductions through rulings by national authorities.
Apple said it has not received any selective tax treatment from the Irish authorities, while the Irish government said it was confident that it has not breached state aid rules will defend its position vigorously, reports Reuters.
Irish Prime Minister Enda Kenny told journalists that "We believe that our legislation ... is very strong and ethically implemented and we will defend that very robustly."
A U.S. Senate subcommittee investigation revealed last year that Apple had cut billions from its tax bill by declaring companies registered in the Irish city of Cork as not tax resident in any country.
Senator Carl Levin, chairman of the subcommittee, said the Apple structure represented "the Holy Grail of tax avoidance."