APPLE INC. The move by the European Commission follows ongoing inquiries into Luxembourg's tax rulings for carmaker Fiat Chrysler (>> FIAT SPA) and online giant Amazon (>> Amazon.com, Inc.), coffee chain Starbucks Corp's (>> Starbucks Corporation) Dutch deal and iPhone maker Apple's (>> Apple Inc.) Irish arrangement.
Tax avoidance, while not illegal, has in recent years galvanised authorities into taking action to try to ensure that multinational companies pay a fair share of their profit.
"We need a full picture of the tax rulings practices in the EU to identify if and where competition in the single market is being distorted through selective tax advantages," European Competition Commissioner Margrethe Vestager said in a statement.
The Commission, which has been looking into deals granted by Luxembourg, Ireland, the Netherlands, Britain, Cyprus, Malta and Belgium for 18 months, probably wants to show that it is playing fair, said Hans Gilliams, a partner at law firm Eubelius.
"I suspect the Commission wants to avoid being accused of partiality, to avoid Luxembourg and other countries saying that they have been singled out," he said.
Luxembourg Finance Minister Pierre Gramegna welcomed the move. "The analysis of matters relating to international taxation and tax rulings ... cannot be limited to one country's regulatory framework and practice," he said.
He voiced support for efforts by the new Commission, run by former Luxembourg prime minister Jean-Claude Juncker, to promote greater coordination among member states on corporate taxation.
International criticism of Luxembourg's role in sheltering major companies from global taxes has overshadowed Juncker's arrival in office.
Gilliams said the bloc-wide investigation could also be useful in resolving the issue on a pan-European level.
"On the basis of this, they can determine a common approach," he said.
It is not clear however if the Commission can extract information from countries which are not currently in their sights if they do not have any evidence of wrongdoing.
Luxembourg said such requests are fishing expeditions and incompatible with the rights of defence. Europe's second-highest court will hear its challenge on Jan. 8.
(Additional reporting by Alastair Macdonald; Editing by Keith Weir)
By Foo Yun Chee
