Two companies in the news recently may have been right to think that the Single Market ‘fair tax’ and ‘anti-competition’ mechanisms are, well, a little slow to catch up and enforce. Just today, and quite correctly, Commissioner Vestager has published a Statement bemoaning the 2003 Luxembourg- routed Amazon structure agreements that resulted in ‘illegal tax advantages’. The Apple Ireland arrangement has similarly come under fire.
Interestingly, the State Aid review seems to have taken more offence with the Irish government than the Company itself. Highlighting poor infringement procedures which have resulted in a recovery of, to date, E nil (out of a levy of Euro 13bn). Even more bizarre is the approach to the Luxembourg government, which has been tasked with recovering ‘unpaid taxes’ from Amazon, but has the complex and cryptic task of working out first, how much that actually amounts to. Given the complexity of unwinding ‘offensive’ IP arrangements with potential tax advantages this may take some time.
If ever there was an example of the benefit of having international tax law (capable) of being administered ‘quickly’ and ‘fairly’ for all business tax payers this must be it. Here are just a couple of features of these cases that make reform imperative if intending SME businesses are to have a level playing field:
- The Amazon arrangements date back to 2003 – some fourteen years ago, with a recovery to date of zero
- The EU taxpayer has to date paid all costs for recovery and litigation on both cases
- The actual tax bill is so complex that it could take many more years for the Luxembourg government to calculate
- The Apple arrangements similarly have a recovery of nil and little likelihood of settlement as the Irish government procedures rather than the Company is now in the firing line.
- In 2016 the UK adopted unpopular ‘Advance payment’ notices for disputed taxes despite much opposition.