Feb. 28, 2018 — A leading authority on European Union taxation policy discussed the uncertainty multinational corporations face in regard to recent changes that could inhibit overseas investment and cost one U.S. company billions of dollar in back taxes.
Ruth Mason, the Class of 1957 Research Professor of Law at the University of Virginia School of Law, presented her work-in-progress paper, "The Rise of State Aid Control," Monday as part of the UH Law Center Spring 2018 Distinguished Speaker Series at the University of Houston Law Center.
She explained how the EU Commission has redefined and stepped up enforcement of "state aid" rules, which in effect preclude individual members from making sweetheart deals on tax rates and other inducements to lure investment away from other European states.
Although enforcement had been rare, in August 2016 the EU commission ordered Ireland to collect more than $14.5 billion in back taxes from Apple that was owed under anti-subsidy rules.
Mason said Apple has the right to appeal, and Ireland must make the political decision of whether recovering the money is worth more than the jobs and future investment might bring.
"What we do know is that Apple is not going to quit operating in Europe," she said.
The situation raises many questions for U.S. and other international corporations: Exactly what are the rules; should investors deal with the EU Commission or individual states; does the Commission even have the expertise to deal with innumerable tax laws or dictate how they should be enforced: should there be one supranational taxing authority?
"The situation has to be fixed," she concluded. "The question is, 'What is the endgame? What happens next?'"
The next speaker in the series will be Randall L. Kennedy, the Michael R. Klein Professor of Law at Harvard Law School, on March 5.