Microsoft avoids taxes in several countries

According to a study, the American computer giant would transfer its profits to companies domiciled in tax havens, Bermuda or Puerto Rico.

In the United Kingdom, Australia or New Zealand: the American computer giant Microsoft avoids, thanks to a complex structure, paying taxes on billions of dollars in countries where it nevertheless holds lucrative public contracts, according to a study published Thursday, October 13. “In many cases, Microsoft has paid no tax in recent years by shifting profits to companies domiciled in Bermuda and other tax havens”denounces in a statement the Center for Research and Corporate Tax Responsibility (Cictar), a research firm based in Australia.

“Microsoft boasts of offering profit margins of more than 30% to its shareholders. Yet in the UK, Australia and New Zealand, (the company) reports returns of 3-4%” only, is astonished Jason Ward, analyst of the firm, quoted in the press release. “It does not seem credible that these successful markets are showing such weak performance”he adds, seeing “a huge red flag of tax avoidance”who “deprives the public sector of much-needed revenue”despite the “billions earned as a supplier to governments” of these countries.

$22.4 billion in dividends but a $15 tax burden

According to the study, Microsoft Global Finance, an Irish subsidiary that is tax resident in Bermuda, centralized more than $100 billion in investments and, despite operating profit of $2.4 billion, n paid no tax in 2020. Another example cited by Cictar, Microsoft Singapore Holdings published in 2020 profits, coming from dividends, of 22.4 billion dollars, but announced a tax burden of only 15 dollars. Microsoft has however concluded these last five years of public contracts whose amounts amount to at least 3.3 billion dollars in the United Kingdom, United States, Australia or Canada, according to the data of this study.

The firm points out that Microsoft is the subject of tax investigations in the United States and other countries, including Australia, and that “more than 80% of its total foreign income passes through Puerto Rico and Ireland”. “In fiscal 2021 and 2020, our foreign regional operating centers in Ireland and Puerto Rico, which are taxed at rates below the US rate, generated 82% and 86% of our pre-tax foreign income”Microsoft said in its 2021 annual report.

Contacted by the authors of the report, Microsoft assured respect “all local laws and regulations” in the countries where it operates.

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