• Vestager sends letter to Lew to dispel `misunderstandings'
  • Unfair tax deals can be `distortive' of competition, EU says

The European Union’s competition chief sought to dispel “misunderstandings” and rebut U.S. claims that her clampdown on preferential tax deals unfairly targets American firms as regulators prepare to rule on Apple Inc.’s fiscal pact with Ireland.

“If a national tax authority gives certain companies a more advantageous tax treatment than other undertakings in the same country, this can be extremely distortive of fair competition,” the EU’s Margrethe Vestager told U.S. Treasury Secretary Jack Lew in letter sent on Monday.

She said the European Commission’s probes into tax rulings are part of the watchdog’s responsibility to police fair competition within the EU. Clawing back undue advantages -- as was the case when Starbucks Corp. was ordered to pay as much as 30 million euros ($32.6 million) in back taxes to the Netherlands -- “simply restores equal treatment.”

“We should not allow misunderstandings of our respective legal and institutional frameworks to arise,” Vestager said in her letter, which is meant to “clarify matters.” The U.S. Treasury has received the letter, an agency spokesperson said, asking not to be named citing policy. The Treasury didn’t have immediate further comment.

Conflict over trans-Atlantic tax practices escalated earlier this month as Lew complained to commission President Jean-Claude Juncker that U.S. firms are unfair targets of state-aid investigations. The Treasury Secretary’s letter came after EU enforcement focused on fiscal pacts Apple, Amazon.com Inc. and McDonald’s Corp. agreed with Ireland and Luxembourg. The companies all say they acted within the law.

Yet, the tax cases have also focused on European firms. The commission ordered Belgium in January to recover about 700 million euros in illegal tax breaks given to at least 35 companies, including Anheuser-Busch InBev NV and BP Plc.

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