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The EU could hit Apple with a $19 billion tax bill next week (AAPL)
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The US and the European Union are gearing up for an epic showdown over Apple's tax bill — and it could happen as soon as next week.
The Financial Times reports that the European Commission is expected to rule next week in a three-year-long inquiry looking into Apple's tax arrangements with Ireland.
At stake is whether the deal Ireland struck with Apple amounts to "state aid," and is therefore illegal. Should the Commission rule against Ireland — which is what the FT reports is likely to happen — then Apple could face a tax bill in the billions.
The exact amount is up in the air — though JP Morgan estimates it could be as much as a whopping $19 billion.
The Obama administration is watching the case with concern, and has warned the Commission of potential consequences if it rules against Apple and Ireland.
The US Treasury said in a white paper published on Wednesday that it "continues to consider potential responses should the Commission continue its present course," and accused the Brussels investigation of being "supranational."
Apple and Ireland deny any wrongdoing, and are expected to appeal if hit with a negative ruling.
Reached for comment, an Apple spokesperson pointed Business Insider towards a recent interview Apple CEO Tim Cook gave to The Washington Post.
"It’s important for everyone to understand that the allegation made in the E.U. is that Ireland gave us a special deal. Ireland denies that. The structure we have was applicable to everybody — it wasn’t something that was done unique to Apple. It was their law," Cook said.
"And the basic controversy at the root of this is, people really aren’t arguing that Apple should pay more taxes. They’re arguing about who they should be paid to. And so there’s a tug of war going on between the countries of how you allocate profits. The way tax law works is the place you create value is the place where you are taxed. And so because we develop products largely in the United States, the tax accrues to the United States."
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