© Lucy Nicholson / Reuters
The EU has been investigating whether Apple's tax dealings in Ireland, which allowed the company to pay very little income tax for its European earnings, violated European rules. Apple is suspected of using loopholes in tax laws and paying just two percent tax in Ireland, well below the official 12.5 percent. The decision is expected to be announced next month.
The Obama administration warned the EU that the investigation could "create an unfortunate international tax policy precedent." According to the document from the US Treasury, Brussels is taking on the role of a "supranational tax authority" overriding the tax codes of its member countries.
"This shift in approach appears to expand the role of the Directorate-General for Competition beyond enforcement of competition and state aid law . . . into that of a supranational tax authority that reviews member state" decisions on corporate tax, it said.
The US also criticized Brussels for setting unfair and "disturbing" precedents and singling out US companies.
Apple has been accused of funneling billions of dollars into Ireland, known for its lucrative tax rates. JP Morgan, which is working for Apple, said the tech company could face a bill for $19 billion in a worst-case scenario.
Amazon and McDonald's are also being investigated by the EU, while Starbucks faces back taxes of up to €30 million.
Comment: UPDATE Aug. 30, 2016: The European Commission ruled on Tuesday that "selective treatment" by Ireland allowed Apple to pay a tax rate of one percent on EU profits in 2003 down to 0.005 percent in 2014. The US company has been ordered to pay up to €13 billion to cover the unpaid tax.
Member States cannot give tax benefits to selected companies - this is illegal under EU state aid rules. The Commission's investigation concluded that Ireland granted illegal tax benefits to Apple, which enabled it to pay substantially less tax than other businesses over many years. Apple was attributing its profits to a "head office" in Cork that had no employees, premises or any economic activity, and paid almost no tax. The 130-page ruling on Apple's Irish operations was published on Tuesday following a three-year investigation.