Microsoft pays very little tax in several countries despite juicy government contracts

In Great Britain, Australia or New Zealand, the American computer giant Microsoft, thanks to a complex structure, avoids paying taxes on billions of dollars in countries where it nevertheless has lucrative public contracts, according to a study published on Thursday 13 October. “In many cases, Microsoft has not paid taxes in recent years by shifting profits to companies domiciled in Bermuda and other tax havens,” the Center for Corporate Tax Research and Accountability said in a statement. (Cictar), a research firm based in Australia.

“Microsoft boasts of offering profit margins in excess of 30% to its shareholders. But in the UK, Australia and New Zealand (the company) reports returns of only 3-4%,” firm analyst Jason Ward is quoted as saying. in the press release. “It doesn’t seem credible that these booming markets are performing so poorly,” he adds, seeing it as “a huge red flag for tax evasion” that “deprives the public sector of much-needed revenue,” despite the ” billions earned as a supplier to the governments” of these countries.

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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.

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The firm points out that Microsoft is subject to investigations by the tax authorities in the US and in other countries, particularly in 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 US rate, generated 82% and 86% of our pre-tax foreign income,” it said. Thus Microsoft in its Annual Report for 2021. Contacted by the report’s authors, Microsoft ensured compliance with “all local laws and regulations” in the countries where the company operates.

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