According to an investigation, the American computer giant would transfer its profits to companies domiciled in tax havens, Bermuda or Puerto Rico.
In Great Britain, Australia or New Zealand: The American computer giant Microsoft, thanks to a complex structure, avoids paying billions of dollars in taxes in countries where it nevertheless has lucrative public contracts, according to a study published on Thursday, October 13. “In many cases, Microsoft has not paid taxes in recent years by shifting profits to companies domiciled in Bermuda and other tax havens”condemns 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. But in the UK, Australia and New Zealand, (the company) reports returns of 3-4%” only, is amazed Jason Ward, analyst in the company, quoted in the press release. “It does not seem credible that these successful markets show such weak results”he adds, seeing “a huge red flag for tax evasion”WHO “deprives the public sector of much-needed revenue”despite “billions earned as supplier to governments” of these countries.
$22.4 billion in dividends, but a tax burden of $15
According to the study, Microsoft Global Finance, an Irish subsidiary domiciled in Bermuda for tax purposes, centralized more than $100 billion in investments and, despite an operating profit of $2.4 billion, paid no taxes in 2020. Another example cited by Cictar , Microsoft Singapore Holdings posted 2020 profits coming from dividends of $22.4 billion, but announced a tax burden of just $15. However, Microsoft has won government contracts in the past five years totaling at least $3.3 billion in the UK, US, Australia or Canada, according to data from this survey.
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 goes through Puerto Rico and Ireland”. “In fiscal years 2021 and 2020, our foreign regional operating centers in Ireland and Puerto Rico, which are taxed at rates below the U.S. 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.