Apple, other companies to be grilled about their European tax deals on Wednesday

Apple, Google, and other companies will be asked about their European tax deals on Wednesday as European Union (EU) lawmakers up the pressure on multinationals to pay more tax on their profits locally, according to Reuters.

The hearing is organized by the European Parliament's tax committee. The committee has no power to order changes, but the hearing reflects the political concerns over multinationals avoiding local tax liabilities, the article adds. The EU is also investigating several cases to see if they breach the bloc's state aid rules that prohibit EU countries from giving some companies an unfair advantage by making special deals on tax.

The EU has already ordered Dutch authorities to recover up to 30 million euros (about US$32.23 million) from U.S. coffee chain Starbucks and Luxembourg to do the same with Fiat Chrysler for their tax deals. Europe’s anti-trust and consumer investigation agency has claimed that Ireland, Luxembourg and the Netherlands have attracted investment and jobs by helping big companies avoid tax in other countries, including EU members. 

For example, the EU feels Ireland was too lenient in rulings it gave to Apple and which helped the company shield tens of billions of dollars in profit from taxation. At 12.5%, Ireland’s corporate tax rate beats the U.S. rate of 35%. However, participating companies don’t pay that 12.5 % under the double Irish structure.