Not allowed to pay the same tax twice

Yahoo: European authorities have clamped down on a special deal between Apple (AAPL) andIrish tax authorities, saying the arrangement uniquely favors Apple and is unavailable to other companies. Nixing the deal—which lowered taxes on much of Apple’s foreign income to virtually nothing—will force Apple to pay taxes in Ireland at the higher rate other companies pay. The bill: about $14.5 billion.
But Apple may get reimbursed for all of that by an unlikely benefactor: the US taxpayer. “It’s extremely possible the US taxpayer will have to pay this bill,” says Stuart Gibson, a former government tax official who’s now editor of Tax Notes International. “For every dollar in tax Apple has to repay in Ireland, they may get to reduce their US tax bill by $1.”
The foreign tax creditThat provision is known as the foreign tax credit, which unlike much of the tax code is fairly simple, in concept. Under the US code, American companies doing business in foreign countries pay tax in the US as well as where they earn the revenue being taxed. In order to prevent companies from being taxed twice, companies earn a 1-for-1 credit on their US tax bill for taxes paid overseas.