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Apple ruling will scare investors away from EU, former commerce secretary says

EU waging war on companies: Kudlow

The European Commission's ruling that Apple must pay back taxes to Ireland is going to scare investors away from the European Union, former U.S. Commerce Secretary Carlos Gutierrez told CNBC on Tuesday.

"The big problem here is not what it's going to do to Apple. Apple is going to survive this. It's what it does to the investment climate in the EU at a time when they desperately need investment, " he said in an interview with CNBC's "Power Lunch. "

On Tuesday, the executive arm of the European Union ordered the Irish government to recoup up to 13 billion euros ($14.5 billion) in back taxes from Apple, plus interest. It concluded the country granted the tech giant undue tax benefits by allowing Apple to pay an effective corporate tax rate of 1 percent on its European profits in 2003 down to 0.005 percent in 2014.

Both Apple and Ireland have said they will contest the ruling.

Carlos Gutierrez, former U.S. Secretary of Commerce and former chairman of Kellogg Co.
Matt Nager | Bloomberg | Getty Images

Meanwhile, Apple isn't the only U.S. company that may have to pay back taxes. The European Commission is also investigating Amazon and McDonald's European tax affairs.

"We're sending a message to any taxpayer in Europe: This is a wonderful place to do business and invest, but you have to play by the rules," EU Commissioner Margrethe Vestager told CNBC.

However, Gutierrez said the decision on Apple was a "claw back" on an agreement that a sovereign nation made with a company.

"This is amazing coming off Brexit, where you have countries who feel like they're getting suffocated by all these regulations coming out of Brussels, " he said.

"This is the kind of thing that creates the trend of more Brexits — an overreach by Brussels," he said.

CNBC contributor Larry Kudlow called the ruling a tax grab by the European Union, and accused the EU of waging war against companies.

"This is a war on business. This is a war on money. This is a war on profits and all they want to do is collect more money to spend more money and forget about the individual sovereignty of these nations," he told "Power Lunch."

"The whole damn continent is going down. It's going down because of its own policies developed by this crazy European Union idea which we never should have had in the first place," he said.

—CNBC's Catherine Boyle contributed to this story.