EU’s Apple ruling - Will Europe’s ‘Vodafone’ moment unleash a global tax war?
In one of the most controversial moments in the war on corporate tax avoidance in recent times, the European Commission (executive arm of EU) has ordered Ireland to recoup Euros 13 billion in back taxes plus interest from Apple after ruling that a special tax arrangement to route profits through Ireland was illegal state aid. This landmark ruling (which is being seen by USA as an assault on the international consensus via BEPS on tackling tax avoidance) has certainly complicated international tax diplomacy. In a defiant statement, the tech-giant has accused the European Commission of launching “an effort to rewrite Apple’s history in Europe” and “upend the international tax system”. For us, Indians, it is but a striking reminder about India’s own “Vodafone” moment triggered by retrospective amendments to the tax law relating to indirect transfers which also sent the global tax fraternity into a tizzy.
Does this historic verdict pave the way for an international political and financial dispute over the European Commission’s role and authority? Will Europe’s “Vodafone” moment unleash a global tax war? Does this ruling cast a murky shadow over the implementation of BEPS?