Because of its complicated corporate structure, Microsoft has allegedly dodged billions in taxes in the United Kingdom, Australia, and New Zealand, whose governments generate lucrative public sector contracts.
The accusations were detailed in a research report recently published by the Centre for Corporate Tax Accountability and Research (Cictar).
According to the organization, Microsoft — which insists on following local rules and regulations everywhere it operates — deprived the public of much-needed money while taking taxpayer funds.
Cictar stated that Microsoft has paid zero tax in numerous cases in recent years by shifting income to subsidiaries in Bermuda and other popular tax havens.
Zero tax on billions in profit
According to the analysis, Microsoft Global Finance — an Irish company with tax resident status in Bermuda — aggregated upwards of $100 billion in investments and paid no tax in 2020 despite securing $2.4 billion in operational profit. In the same year, Microsoft Singapore Holdings reported $22.4 billion in dividend income and merely $15 in tax liabilities.
According to Cictar analyst Jason Ward, Microsoft claims its stockholders’ profit margins are more than 30 percent, while files on the United Kingdom, Australia, and New Zealand indicate returns of 3 percent to 4 percent.
Puerto Rico and Ireland
The analysis shows that, over the last five years, Microsoft has signed governmental contracts worth at least $3.3 billion in the United Kingdom, the United States, Australia and Canada. Cictar noted that Microsoft is being investigated by tax collectors in the United States and other countries, including Australia.
In its 2021 annual report, Microsoft confirmed that it operated through overseas locations in Ireland and Puerto Rico in 2021 and 2020, adding that they accounted for 82 percent and 86 percent of its international income before tax. The locations were selected due to their relatively low income tax levels.