Microsoft Avoids Paying Tax In Many Countries

Tech giant Microsoft has avoided billions in taxes in Britain, Australia and New Zealand, all countries where it has lucrative public sector contracts, because of its complex corporate structure, a study published Thursday claimed.

A new study by the Australian firm CICTAR has revealed how the American tech magnate Microsoft used shell companies in foreign countries to avoid paying taxes in the United Kingdom, Australia or New Zealand.

“Microsoft boasts of offering profit margins of over 30% to its shareholders but in the UK, Australia and New Zealand, (the company) reports returns of only 3 to 4%," remarked Jason Ward, an analyst at the firm, in a press release.

According to the data of the study, in spite of Microsoft signing large contracts with the British, American, Australian and Canadian governments in the last five years, which have amounted to at least $3.3 billion in the United Kingdom, the United States, Australia or Canada, the app had not been paying its fair share.

One of the ways they managed to do this was by shifting profits to shell companies residing in Bermuda.

For example, Microsoft Global Finance, an Irish subsidiary is a tax resident in Bermuda. They had centralised over $100 billion in investments and, despite operating profit of $2.4 billion, and did not pay tax in 2020.

Furthermore, Microsoft Singapore Holdings also reported 2020 earnings from dividends of $22.4 billion, but announced a tax burden of only $15.

“It doesn’t seem credible that these thriving markets are showing such poor performance,” Ward added as it "deprives the public sector of much-needed revenue,” despite the “billions earned as a supplier to the governments” of these countries.

October 13, 2022