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Global Tax 50 2016: Margrethe Vestager

Competition commissioner, European Commission

Margrethe Vestager
Margrethe Vestager was also in the Global Tax 50 2015, 2014, and2013

The EU competition commissioner has had a busy year scrutinising the tax affairs of multinational enterprises and member states. She tops this year's Global Tax 50 list for her most notable decision concerning Apple's tax rulings with Ireland.

The case, where Vestager said that Ireland had granted illegal tax benefits to Apple and ordered the company to pay €13 billion ($14.5 billion) in back taxes, sparked a major discussion around the topic of fair taxation. It also led to outbursts by US politicians who accused Vestager of preying on US multinationals in a number of state aid cases spanning the past two years.

Both Apple and Ireland are appealing the order to pay back taxes. Apple CEO Tim Cook called the decision "total political crap" and said "they just picked a number from I don't know where".

"It is 100% legitimate to tax profit where it is generated. From our perspective, it is irritating when American companies pay less in taxes than European ones," Vestager told Germany's Handelsblatt newspaper after announcing the Apple decision.

State aid issues have been a big talking point throughout 2016, and Apple was not the only company that had its operations investigated by the European Commission. Over the past year, the former Danish economy minister also looked into Luxembourg's tax treatment of Amazon, GDF Suez (now Engie) and McDonald's, among other cases. Some of these companies are still under investigation and a decision is pending.

Vestager has been targeting illegal state aid involving tax rulings since the beginning on the year. On January 11 2016, she started by declaring that the Belgian 'excess profits' tax scheme was illegal under EU state aid rules. The practice reduced the corporate tax base of several multinational groups by between 50% and 90% to discount for so-called "excess profits" that allegedly resulted from being part of a multinational group. The arrangement had been in place since 2005 and at least 35 multinational groups benefited, mainly from the EU, on the basis of a binding tax ruling. Vestager said that the scheme allowed companies to pay substantially less tax simply because they were a multinational business. Belgium was ordered to reclaim around €700 million ($781 million) in unpaid taxes from the multinationals. However, the matter did not end there. Chemical manufacturer BASF and other multinational companies have taken the case to court, accusing the Commission of exerting an "excess of power" and unfairly using state aid rules to prohibit the excess profits system. The case will continue into 2017.

Throughout 2016, several high-profile politicians and business leaders have voiced their concerns that the Commission seems to be applying the state aid concept every time it sees that profit is going un-taxed and that this is not actually what the state aid rules are for. The argument is that state aid is meant to be used in situations where one jurisdiction grants tax or other benefits that depart from the jurisdiction's normal reference system. Vestager's predecessor Neelie Kroes also attacked the Commission's decision in the Apple case for this reason, and said that state aid rules should not apply to tax matters. "EU member states have a sovereign right to determine their own tax laws. State aid cannot be used to rewrite those rules, however, the current state aid investigations into tax rulings appear to do exactly that," Kroes wrote in the Guardian newspaper.

Nevertheless, Vestager has the ability to shape the reputation and image of the Competition Commission, and she has left her mark on the institution like none of her predecessors. Vestager has made it her mission to ensure that the tiniest of companies can stand a chance against their bigger counterparts, and whether the rest of the tax world agrees with Vestager or not, she has undeniably put fair taxation higher up on the agenda and left some multinationals trembling with the fear that they may be next on Vestager's list of investigations.

The Global Tax 50 2016
View the full list and introduction
The top 10 • Ranked in order of influence
1. Margrethe Vestager2. The International Consortium of Investigative Journalists
3. Brexit4. Arun Jaitley
5. Jacob Lew6. Antoine Deltour and Raphaël Halet
7. Operation Zealots8. Guy Verhofstadt
9. Theresa May (and the 'three Brexiteers')10. Donald Trump
The remaining 40 • In alphabetic order
Kemi Adeosun Piet Battiau
Elise Bean Monica Bhatia
Allison Christians Tim Cook
Rita de la Feria Caroline Flint
Judith Freedman Chrystia Freeland
Pravin Gordhan Orrin Hatch
Meg Hillier Mulyani Indrawati
Lou Jiwei Paul Johnson
Stephanie Johnston Chris Jordan
Pravind Jugnauth Wang Jun
Jean-Claude Juncker Kathleen Kerrigan
Christine Lagarde Werner Langen
Jolyon Maugham Angela Merkel
Narendra Modi Will Morris
Michael Noonan Grace Perez-Navarro
Platform for the Collaboration on Tax Donato Raponi
Pascal Saint-Amans Heather Self
Robert Stack Tax Justice Network
The Gulf Cooperation Council (GCC) Transparency International
US Committee on Ways and Means Rodrigo Valdés

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