Microsoft avoids taxes in several countries

Microsoft is avoiding taxes in several countries


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 released Thursday. 

“In many cases, Microsoft has paid no taxes in recent years by shifting profits to tax-domiciled companies 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. However, in the United Kingdom, Australia and New Zealand (the company) reports returns of only 3 to 4% “, is surprised Jason Ward, analyst for the firm, quoted in the press release.

“It doesn't seem credible that these thriving markets are showing such poor performance,” he adds, seeing it as “a huge red flag of tax avoidance,” which “deprives the public sector of much-needed revenue. need”, despite the “billions earned as a supplier to the governments” of these countries.

According to the study, Microsoft Global Finance, an Irish subsidiary which is tax resident in Bermuda, centralized over $100 billion in investments and, despite operating income of $2.4 billion, paid no taxes 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 charge of only 15 dollars.

Microsoft nevertheless concluded these last five years of public contracts worth at least $3.3 billion in the United Kingdom, United States, Australia or Canada, according to data from this study.

The firm points out that Microsoft is the subject of investigations by the tax services in the United States and in other countries, in particular in 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 foreign income before tax,” Microsoft said in its 2021 annual report.

Contacted by the he authors of the report, Microsoft ensured compliance with “all local laws and regulations” in the countries where it does business.