A fair few countries will be watching the way the fight between the European Union and Apple develops, hoping that they can also get their share of the back taxes that the computer company has been ordered to pay Ireland.
Overnight the EU ordered Apple to pay €13 billion (A$19.73 billion) in back taxes to Ireland.
The method followed by Apple is to allocate all profits to its operations in Ireland. The agreement Apple has with Dublin has allowed it to use the country as its global distributor.
Other countries, like Australia, have to buy products from the Irish subsidiary at artificially inflated prices and, as a result, the local outfit (the one in Australia) ends up making a very small profit. Hence it pays little or no tax in Australia.
{loadposition sam08}There is a major factor that argues against the EU decision having any positive ramifications for Australia.
Graphic courtesy the European Commission.
The US is now definitely looking at a way of getting the nearly US$2.1 trillion stashed abroad by American multinationals brought back.
One simple reason: the US needs a lot of money to repair its aging infrastructure and this money, if invested in such projects, will provide the kinds of returns that the multinationals are looking for.
Both presidential candidates, Hillary Clinton and Donald Trump, have indicated that they will take the initiative to get this money back to the US and that means they will cut a deal that is agreeable to companies like Apple.
Apple's chief Tim Cook recently made it plain that he would not bring back his company's US$200 billion+ back unless the tax rates were what he considered to be fair.
Given this scenario, it should be obvious that the US does not want to rub any of these companies the wrong way. And so, I'm sure, Uncle Sam will offer a little friendly advice to its allies, especially its 51st state Australia, to go easy on the likes of Apple.
In the case of countries that are not inclined to take a "friendly" hint, Washington will offer the kind of "advice" it conveyed through the late Richard Armitage to Pakistan's then president Pervez Musharraf before beginning the so-called war on terror by invading Afghanistan: Co-operate or we will bomb your country back to the Stone Age.
Both major parties in Australia know this reality. The US never has a problem getting Australia to fall in line; it only has to say "jump" and the meek response will be "how high, sir?"
Well before the EU ruling, the US was casting this as a move by the EU against American multinationals. A whitepaper issued by the US Treasury on 24 August was critical of the EU move, arguing that they targeted only American companies.
In it, US Treasury Secretary Jack Lew raised several objections to the EU's move, including a claim that the Commission's new approach was inconsistent with international norms and undermined the international tax system.
There will be a lot of brave talk by politicians about getting US multinationals who operate in this country to pay the taxes they owe. And it will stay at that.