EU Demands U.S. Tech Companies Pay 26% ‘Equalization Tax’ Rate

The European Union has announced that it will force U.S. tech companies like Google and Apple to start paying a Europe-wide “equalization tax” rate of about 26.22 percent.

Breitbart News reported last year that Apple Inc.’s CEO Tim Cook called the European Commission on Taxation’s rejection of the world’s most profitable company only paying an effective corporate tax rate of 0.00045 percent “maddening.” He expressed confidence the EU’s decision to charge $14.5 billion in back taxes and penalties would be overturned.

European Union politicians passed rules in July forcing multinational corporations with more than $871 million in EU operating revenue to publish detailed country-by-country public reports of income and tax payments information to prevent the companies from arranging their affairs to declare most profits in foreign tax havens.

The regulations are clearly aimed at America’s so-called “FAANG” tech multinationals, including Facebook, Apple, Amazon, Netflix, and Google which are infamous for using tax-avoidance schemes, such as the infamous “Double Irish Flip.”

The “flip” involves the tech giants transferring their patents to an Irish subsidiary, EU’s lowest taxed jurisdiction, They then run sales though a subsidiary in a Dutch Caribbean tax haven to bleed off the profit; then use “transfer pricing” to sell the products back to the low-tax Irish subsidiary; and then close sales in any country at virtually no taxable profit. The EU banned the “flip” in 2015, but gave U.S. multinationals another 5 years to comply.

Although the exact figure for how much in taxes Apple has avoided in Ireland remains a secret, the U.S. Senate Permanent Subcommittee on Investigations revealed that Apple’s Irish subsidiary in 2011 paid just $10 million in taxes on $22 billion in pre-tax earnings. The puny tax rates Apple has paid in the U.S. and EU helps explain how the planet’s most profitable corporation amassed a $257 billion cash hoard.

Conservatives philosophically hate the idea of corporate taxes, because customers end up paying the taxes that are added to the price of purchased goods. But notoriously liberal Silicon Valley tech multinationals, such as Apple, have seemed to love high corporate tax rates — especially since they have not actually had to pay them.

Angry brick-and-mortar retailers across the European Union have been especially angered by Amazon.com’s explosive online European sales growth, which they blame on the higher prices “street level shops” have to pass through to their customers to pay property and corporate taxes.

German and French EU politicians are leading the effort with the 28 members of the European Union to establish a weighted average “equalization tax” rate of about 26.22 percent that would be charged on a company’s sales turnover in each nation.

German hard-left Green Party member Sven Giegold told Dow Jones News Service: “Public country-by-country reporting will make it much harder for multinational corporations to shop around for the lowest possible tax rate, and help bring illegal activity to light.”