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Microsoft in trouble with tax in the UK

by on11 December 2012

Starbucks campaigners now focus on Redmond

The cash-strapped UK is starting to focus on the huge amount of dosh that Microsoft is not paying its taxman.

Campaigners, who already forced Starbucks to cough up more tax cash, are now focusing their attention on Redmond which pays nothing of the £1.7 billion it makes on online revenues. The US technology group is understood to be channelling online payments for its Windows 8 operating system and other downloads of software through Luxembourg and Ireland, where corporation tax is lower than the UK.

This means that Microsoft’s Irish registered company, Microsoft Ireland Operations has reported £1.7bn of revenues from the UK on which the company has paid no UK corporation tax. Microsoft insists it pays all due taxes, as required by law, worldwide. Legally that might be the case, but campaigners in the UK are starting ask Redmond difficult questions.

Things are going against Microsoft in the US too. A Congressional investigation earlier this year designed to highlight the loopholes in America’s tax code claimed that Microsoft, the world’s largest software company, shielded its profits from at least $6.5 billion of taxes through a series of transactions with foreign ¬subsidiaries in countries with low tax rates, such as Ireland, Singapore and Puerto Rico.

Of course in the US action is less likely to be taken against Microsoft because the government over there is entirely based on doing what corporates tell it to do. However in more democratic countries, Redmond could be in trouble.

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