Microsoft Saves Millions Of Dollars In Taxes In UK

22 Jun

Microsoft tax, Microsoft employees

By booking sales in Ireland, Microsoft has evaded tax worth $143.59 million in UK

Microsoft Corporation has allegedly been avoiding making a British Corporation tax payment of $143.59 million according to a “confidential deal” with British taxation authorities. The agreement supposedly lets the information technology company sends its revenue through its Ireland based operations, which charges a tax rate of 12.5%, which is quite low compared to the Britain’s 20%.

As per reports by the Sunday Times, since 2011 the organization has sent “more than $11.7 billion” (US equivalent of £8bn) through Ireland and the important sections of its overseas structure were ratified by HM Revenue and Customs (HMRC) in the so-called advance pricing contract signed 4 years. Under the agreement, the inquiry found, revenue earned from online purchases by customers in UK could be recorded through the Dublin based Microsoft Ireland Operations.

Sunday Times has reported that from June last year MIO accounts have shown that sales in Britain generate a sum of over $3.35 billion in 2015. Nevertheless, the tax payment by the British division of the organization was $24.65 million. Nevertheless, according to the findings, Sunday Times has claimed that the taxation authority has signed 143 advance pricing contracts in the half a decade starting from 2009 and ending in 2014 alone.

The taxation authorities would not reportedly reveal any further details on the agreements, citing confidentiality. By no means, Microsoft is the only foreign organization running in the country that is enjoying the present legal regime. Other tech organizations-including Google as well as Facebook- have earlier been criticism for similar issues.

The American social networking service provider Facebook was challenged by a backlash following the revelation that it was employing alike tax avoidance strategies.2 years ago, the organization only paid $6311 in British Corporation tax on the profit of $2.9 billion earned that year. In comparison, on an average the tax billion for its British workers was $7865.80.

After being criticized, the Menlo Park based organization stated it would stop routing its sales for its main business clients through Ireland. In other news, following the disclosure of the details regarding the confidential agreement between HRMC and Microsoft, campaigners have raised the demand that the regime must publish every detail of any deal signed with multinationals.

In other news, as per reports by Silicon Republic Microsoft Corporation has employed 1200 persons in Ireland and is constructing a new campus worth $152.05 million in Leopardstown. Previously this year, Verge reported that Google also exploited the tax arrangement in Britain and instead of paying more than $220 million in taxes it paid just around $29 million by recording its sales revenue in Ireland which means it was charged an effective tax rate of more than 2.5%.

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Posted by on June 22, 2016 in Microsoft, Technology


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