Friday, July 24, 2020
The Hill op-ed: Apple Just Saved $14 Billion In Tax — But Can the Tax System Be Saved?, by Ruth Mason (Virginia):
A European Commission decision that Apple Inc. owed $14 billion in back taxes to Ireland was annulled by the European Union’s lower court last week. There are three things to understand about the ruling. First, the commission was right that Apple dodged its taxes. Second, the commission decision trying to collect that tax was wrong, so the court was right to annul it. Third, our broken international tax system is to blame. ...
The truth is that at the time the facts of the Apple case arose the international tax system was badly broken, and although countries have made major progress since then on preventing tax abuse, including by filling some of the loopholes used by Apple, the system is still broken.
Modern tax treaties are based on a model written in the 1920s that no longer serve states’ needs in the digital economy. But piecemeal approaches cannot fix the international tax system. Instead, states must cooperate to devise a new regime fit for today’s economy. The new regime must be robust against corporate tax avoidance, and it must fairly distribute tax revenues from international commerce. ...
Even though Apple won this case, the commission will appeal it. Meanwhile, $14 billion remains tied up in escrow, and digital taxes are popping up everywhere. To make business safe for American companies abroad, and to secure its own tax revenue, the United States must cooperate to reform international tax.