Obama says countries must move in concert on tax avoidance

HANGZHOU: US President Barack Obama said on Monday that the United States had to move in concert with other countries on the issue of tax avoidance, as some US allies were "racing to the bottom" with their tax policies.

The European Commission said last week that Apple Inc owed up to 13 billion euros ($14.50 billion) in back taxes to Ireland, based on existing regulations, a decision that both Apple and Ireland, which relies on low taxes to attract investment, have vowed to fight.

The ruling against Apple has pushed the issue into the limelight and raised the risk of significant push-back from the United States, where some lawmakers are saying it represents a European encroachment on the US potential tax base.

Obama said he had raised tax avoidance with leaders from the world's 20 biggest economies at the G20 summit in the eastern Chinese city of Hangzhou, but did not mention the Apple case.

"We're doing a bunch of stuff at home and we want to coordinate internationally," Obama told reporters at a briefing at the close of the summit.

"The one thing that we have to ensure we do is to move in concert with other countries, because there is always a danger that if one acts unilaterally, that it's not just a matter of a US company being impacted, but it may also have an impact in terms of our ability to collect taxes from that same company," Obama said.

"In the same way, we then have to do some coordination with even some of our closest allies racing to the bottom in terms of how they enforce their tax policies in ways that lead to revenue shifting and tax avoidance in our country." Obama said tackling the issue effectively was important to "regain the trust" of people who feared the system is rigged, but that it would not be fixed overnight.

The EU decision against Apple comes amidst a coordinated global initiative to crack down on tax evasion by multinational companies, spearheaded by the Paris-based Organization for Economic Cooperation and Development (OECD). Apple's Chief Executive Tim Cook last week described the ruling as "total political crap", but France and Germany have come out to back Brussels on the decision.

European Commission President Jean-Claude Juncker said on Sunday in Hangzhou that the ruling against Apple was clearly based on facts and existing rules and was not a decision aimed against the United States.