A multi-billion euro back tax bill handed to Apple by the European Commission should not be seen as a precedent for future tax cases as it was based on state aid rather than tax law, according to a top e OECD official.
Pascal Saint-Amans, who is leading the Organisation for Economic Co-operation and Development’s flagship Base Erosion and Profit Shifting (BEPS) project, said that under the new OECD rules, most of the tax from US technology multinationals like Apple should be paid in the United States, not Ireland.
But the European Union antitrust regulators last month ordered Apple to pay up to $14.6 billion in back taxes to the Irish government after ruling that a special scheme to route profits through Ireland constituted illegal state aid.
Saint-Amans said that in transfer pricing terms, the bulk of the profit clearly belongs to the United States” rather than Ireland or any other European country, told journalists in Dublin.
Transfer pricing, the setting of prices for the transfer of goods or services from one subsidiary to another which critics say is used to reduce tax liabilities in relatively high-tax countries, is a key target of the BEPS process.
“My understanding is that the EU decision is based on a certain form of legalistic state-aid reasoning which is specific to the state-aid investigation. It is not a transfer pricing case,” he said.
“What is extremely important is that these rules, these standards, be implemented consistently by everybody and that the state-aid cases do not undermine the standard, in particular, on transfer pricing rules,” he said.
Saint-Amans said Apple’s tax planning in the period studied by the EU was “outrageous”, would not be possible under the BEPS rules.