US taxman cometh for Apple

taxmanWhile Apple claims that the EU  is all part of an “anti-American plot” it would appear that the US taxman is about to demand a slice of the action.

The US Treasury said it was tightening restrictions on companies’ use of foreign tax credits to reduce what they owe in US taxes.

Treasury Assistant Secretary for Tax Policy Mark Mazur said the government was closing another tax loophole that contributes to the erosion of the US tax base.

Analysts have speculated whether Apple could cut its US tax bill by claiming foreign tax credits for its extra tax bill in Ireland.

Under normal circumstances, US companies can reduce the taxes they owe the US government by the value of the tax credits they claim for taxes paid abroad on foreign profits. No US tax is due on those profits until they are brought into the United States, or repatriated.

But the new rule will prevent companies faced with back tax bills from “splitting,” a strategy that allows companies to bring foreign tax credits into the United States without repatriating the income from which they were derived.

Apple is not saying anything of course. The Treasury had no comment on whether its notice would have an impact on Apple directly, but a spokesperson said the notice applies to all companies required by a foreign government to pay additional taxes, including those hit by state-aid cases.