Obama moves on tax avoidance in wake of Apple decision

The Obama administration took action on Thursday to limit the use of foreign tax credits by American multinational companies to reduce their US tax bills, a move that followed the European Commission's order that Apple pay back taxes to Ireland.

The US treasury issued legal guidance reducing the scope companies have to apply foreign tax credits against their US tax obligations. It was not immediately clear how this could affect Apple, which European regulators ordered last month to pay Ireland €13 billion.

"We are closing another tax loophole that contributes to the erosion of our tax base," said treasury assistant secretary for tax policy Mark Mazur in a statement.

Analysts have speculated whether Apple would be able to cut its US tax bill by claiming foreign tax credits for the extra taxes it has been told to pay in Europe.

The US treasury’s tax notice applies to all companies required by a foreign government to pay additional taxes, a treasury spokesperson said. – (Reuters)