WASHINGTON — Speaker of the House Paul Ryan (R., Wis.) along with several lawmakers on Capitol Hill on Tuesday condemned a European Commission’s ruling against Apple Inc. that requires the American tech giant to pay Ireland $14.5 billion in back taxes.
The EC, which is the executive body of the European Union, issued a ruling Tuesday stating that Ireland provided illegal tax incentives to Apple over several years and must now recoup as much as 13 billion euros, or $14.5 billion, from the company.
The reaction from U.S. lawmakers was strong.
“This decision is awful. Slamming a company with a giant tax bill — years after the fact — sends exactly the wrong message to job creators on both sides of the Atlantic,” Ryan said. “It’s also in direct violation of many European countries’ treaty obligations. This is precisely the kind of unpredictable and heavy-handed taxation that kills jobs and opportunity.”
Ryan said the case illustrates the urgent need to “fix” the U.S. tax code.
“We need more American companies to invest their money and create jobs right here in the United States. Today’s decision should be a spur to action,” Ryan said.
House Ways & Means Chairman Kevin Brady (R., Texas) called the EC decision “predatory and a naked tax grab.”
“And it is another extreme consequence of our broken tax code that continues to hurt American workers,” Brady said. “This is occurring because our uncompetitive tax code strands American profits overseas instead of allowing businesses to bring those profits home to reinvest in our jobs, research and growth.
“Instead of standing by and allowing other countries to deliver multibillion-dollar tax bills to American companies, Washington should act now to ensure this doesn’t happen again,” Brady said, pushing a tax reform blueprint that House Republicans put forward earlier this year.
Margrethe Vestager, the European Commissioner for competition, outlined the details of the EC’s investigation and Tuesday’s ruling.
“The European Commission has today adopted a decision that Apple’s tax benefits in Ireland are illegal,” Vestager said. “Two tax rulings granted by Ireland have artificially reduced Apple’s tax burden for over two decades, in breach of EU state aid rules.”
She said “this selective tax treatment of Apple in Ireland is illegal under EU state aid rules. It gave Apple a significant benefit compared other businesses.”
Apple was ordered to repay the benefits worth up to $14.5 billion, plus interest.
Vestager said the decision “sends a clear message: Member states cannot give unfair tax benefits to selected companies. No matter if they are European or foreign, large or small, part of a group or not.”
Apple’s chief executive officer, Tim Cook, defended his company’s practices and vowed to appeal the EC’s decision. The EC has been ramping up pressure on U.S. firms to repay taxes it claims they have avoided in countries including Luxembourg, the Netherlands and Ireland. Starbucks and Fiat’s tax payments have been found unlawful already, while McDonalds and Amazon remain under investigation. Microsoft, Google and Facebook all have used the same tax practices in Ireland that the EC has ruled are illegal in the case of Apple.