U.S. issues white paper criticising EU over tax dispute probes

NEW YORK, U.S. - Dubbing the European Commission as a "supra-national tax authority", the U.S. has warned it against taking action on Apple Inc

and other American companies over allegations of tax avoidance. 

The U.S. Treasury Department, in a white paper released on Wednesday, said the Brussels-based commission had the potential to threaten global tax reform deals. “This shift in approach appears to expand the role of the commission’s Directorate-General for Competition” which is "beyond" enforcement of competition and state aid law, the Treasury said in the paper. 

“The cases cited by the commission do not give taxpayers prior notice that the commission would interpret its powers in this way or that selectivity would no longer be a meaningful precondition to a finding of state aid," it said.

The commission has started investigations into tax rulings that Apple, Amazon.com Inc, Starbucks Corp and Fiat Chrysler Automobiles NV received in different EU nations. 

The EU is likely to deliver its decision on Apple in September, which could see the company shelling out multi-billion pound bills for unpaid taxes. 

The U.S. had said earlier this year the investigations appear “to be targeting U.S. companies disproportionately.”

Commission spokesperson Lucia Caudet, however, said on Wednesday that EU law “applies to all companies operating in Europe - there is no bias against U.S. companies.”

Caudet said the commission has been in constant contact with U.S. authorities over tax issues, and remains available to offer all necessary further clarifications about European laws. 

"The Commission welcomes that the fight against tax evasion and tax avoidance is high on the political agenda on international, EU and national levels," she said.

U.S. President Barack Obama has advocated taxing companies’ accumulated offshore profit at 14 percent, below the 35 percent U.S. statutory rate for corporate income tax. 

“There is a possibility that any repayments ordered by the Commission will be considered foreign income taxes that are creditable against U.S. taxes owed by the companies in the United States. If so, the companies’ U.S. tax liability would be reduced dollar for dollar by these recoveries when their offshore earnings are repatriated or treated as repatriated as part of possible U.S. tax reform," the Treasury's white paper said.

A Treasury Department deputy, in a blog post on the agency's website, added that the investigations have global implications as well for the international tax system and the G20's agenda to combat tax avoidance while improving tax certainty to fuel growth and investment.