The US Treasury “White Paper” is very interesting, you can find it here…
First, the guy who stuck his name to the top of the paper is someone with a law degree who is a career party hack. Started in Tip O’Neils office back in the '70s, part of every Dem administration since, and who’s only foray into the business world was a few years before the '08 Crash at City running a division that specialized in operating very creative derivative vehicles through some of the most scenic tax havens in the Caribbean. An odd choice for COO in so many ways. Or maybe not.
So the classic current administration Pay to Play operative. So no mystery about the paper or its tenor.
Next the executive summary. After reading the three points my reaction was, is that all you’ve got? The main complaint is that the EU is “not playing by the rules”. Except that each of the three “complaints” has been committed on multiple occasions by both the Treasury, Executive and US Courts in the past going back many decades. The US has a very long history of all three complaints and has acted on multiple occasions in the past where it considered US law and US ruling as having precedent over foreign law, international conventions, and have been applied retroactively.
So the papers position is the legal equivalent of clutching at straws.
The rest of the paper only mentions Apple in passing and makes a long of case law arguments about why none of the other US companies under investigation are guilty. Its almost all about the other companies. The paper makes no real attempt to defend Apple because they really have no defense from case law.
One first reading the biggest weakness for the Treasury position is the first test for state aid “(1) is financed by the State or through State resources”. They are trying a defense using a facile reading of this test.
In the real world if we have company A and company B. And both would owe $100M in tax if operated in a standard trading manner. That is $200M on the states balance sheet. A tangible asset. Now if the state decided to forgo collecting that $100M for company A that is a net transfer of tangible assets from the state to company A. That $100M in tax owed would be a liability on company A’s balance sheet. That transfer of $100M, the nullification of the tax liability by the state, is under the definition of state aid state financing of company A no matter how you try to cut it. But I’m sure the lawyers will spend years arguing otherwise.
Now company B pays its $100M in tax. Thats the selectivity test satisfied. Apple had a different tax regime from Google, MS etc…
Scale up and add lots of complications but thats the legal position in a nutshell.
Starbucks and Amazon will probably get off eventually but Apple with their cute hoor stunt of a null tax residency are basically fucked. The only thing that will save Apple is a very long war of legal attrition. Which I am sure they are gearing up for.