TPT November 2016

G LOBA L MARKE T P L AC E

its cake and eat it, too. By definition, all Commission state aid cases are retroactive – because they deal with past behaviour.] Who will win? European competition authorities have been underestimated before, at great cost to their opponents. They’re tough, and they know companies will do a lot to maintain access to the EU’s 500 million consumers. That said, the EU has been pushing boundaries (and hitting walls) with a number of its competition cases, and the costs of a massive tax dispute with a key ally probably outweigh the benefits. We’re headed for a hidden compromise. [“Reality check” by Politico: The US government is the only advanced-economy government to run a policy of citizenship- based taxation for individuals. That policy leaves many Americans living overseas facing double taxation, and leaves companies that offer those people banking services subject to huge penalties if they don’t share their American clients’ details with US authorities. In other words, the US government has no problem unilaterally deciding what share of individual income it wants to tax. It just wants foreign authorities to be less unilateral in their own tax approaches.] Of related interest . . . › More than half of American tech start-ups valued at $1 billion or more had at least one immigrant founder, according to a recent study by the National Foundation for American Policy, a research group that focuses on immigration issues. Now, under a rule proposed on 26 August by the Department of Homeland Security, foreign entrepreneurs in any industry could soon be eligible for a new immigration option that would grant them temporary entry to the US for up to five years. The proposal, which does not require congressional approval, would allow immigration officials to admit entrepreneurs case by case. To qualify, an applicant must have an “active and central role,” and a significant ownership stake, in an American company founded over the previous three years. In a presidential election campaign season roiled by acrimonious immigration issues, the move is one of several efforts by President Barack Obama to liberalise America’s immigration policies without action from a resistant Congress. Gaining an immigration route for start-up founders has been one of Silicon Valley’s political priorities for years. Oi l and gas A protest against a pipeline by a tribe of the Sioux nation of Native Americans is ‘an environmental and cultural flash point’ “[In the week of 22 August], an impassioned fight over a 1,170- mile oil pipeline moved from the prairies of North Dakota to a federal courtroom in Washington.”

A Europe-US tax war? As the European Commission mulls tax arrangements at home and abroad, the US protests EC tax probes into American companies The competition department of the European Commission (EC) has rejected US claims, made in a 24 August white paper issued by the Treasury Department, that it is unfairly targeting American companies in its effort to curb tax avoidance in Europe. The charge of bias was flatly rejected by an EC spokesperson, Lucia Caudet. “This is very clear if we look at the facts,” she wrote. “In October 2015 the first [EC] state aid decisions on tax rulings concerned a European company, Fiat, as well as a US company, Starbucks. In January 2016, the Commission adopted a negative decision concerning a Belgian tax scheme with recovery concerning 35 mostly European companies.” In the 25 August edition of its “Brussels Playbook”, the independent news and commentary site Politico (Arlington, Virginia) recommended that “tech pros” seeking the full story consult “US Treasury Slams EU Tax Probes ahead of Possible Apple Verdict” at http://politi.co/2c756u9. But Politico’s Brussels-based senior EU correspondent Ryan Heath thought that an introduction in question-and-answer form might also be useful. Here, lightly edited and abridged, is his insider’s view of a complex issue in its early stages: How did we get to this point? Most governments now agree that it has been too easy for multinational companies to minimise tax; and they have been working, slowly, to close loopholes. Instead of examining only generic tax breaks – to see if they amounted to an unfair subsidy to certain companies – the EU competition authority decided in 2014 to get more aggressive. They’re now looking at individual tax rulings (special low-tax deals) that some European governments have granted to individual companies. Why would the US feel targeted? Because their successful tech companies are the ones that find it easiest to cut tax deals in Europe. That’s because they have most or all of the following attributes: they’re big, have lots of tax lawyers, offer high-skill jobs (thereby creating bidding wars among governments), and they’re new and thus not weighed down by tradition and contracts. Plus, unlike big industrials they don’t have massive factories to move from one country to another. Michael Mandel of the Progressive Policy Institute, which first pushed the US Treasury to intervene on the issue, has blogged: “The European Commission has the right to impose whatever rules it wants on state aid. But it doesn’t have the right to unilaterally decide what share of multinational income it gets to tax.” [Fact check by Politico: One of the Treasury Dept arguments is that the Commission “should not seek retroactive recoveries under its new approach.” This is Treasury wanting to have

56

www.read-tpt.com

N OVEMBER 2016