The other key concept is the cost of regulation, especially of EU and Ireland, but assuredly of the US. EU and Ireland let lose its tax net to allow multinationals to come and invest, thus loses billions of tax income, and US in not being able to tweak the multinationals’ foreign income regulation is continuously losing taxable income. The high tax rate of 35 percent in the US is also a hindrance in letting multinationals repatriate their income home (Kofler, 2011). Regulations sought in each countries have been dysfunctional and are not really effective enough to seize foreign taxable income. This creates political tensions among EU and US intent of bilateral trade.
Apple’s Ireland backdated tax bill of $14.5 billion which is demanded by the European Union is creating an issue for the US treasury, because if Apple declares its income in Ireland and pays taxes, the US treasury loses that same amount of income which can be taxed at an even higher rate (Browning, 2016). Ireland has offered a significantly lower tax rate to Apple to promote competitive business in the EU, but now the EU demanding such a large tax amount is creating problems for Apple, Ireland, and the US.