LONDON, Oct 13, 2022 (BSS/AFP) - 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.

The company, which insists it respects local laws and regulations everywhere
it operates, was starving the public purse of much-needed revenue while
receiving taxpayer cash, the Center for Corporate Tax Accountability and
Research (Cictar) said.

"In many cases, Microsoft has paid zero tax in recent years by moving profits
to companies tax-domiciled in Bermuda and other well-known tax havens,"
Cictar said in a statement.

According to the study, Microsoft Global Finance -- an Irish subsidiary that
has tax resident status in Bermuda -- consolidated more than $100 billion in
investments and, despite an operating profit of $2.4 billion, paid no tax in
2020.

In another example, Microsoft Singapore Holdings posted profits from
dividends of $22.4 billion in 2020 but announced a tax liability of just $15.

"Microsoft boasts of profit margins of over 30 percent to its shareholders.
Yet, in the UK, Australia and New Zealand, filings show returns of three to
four percent," said Jason Ward, an analyst with the organisation.

"It does not seem credible that these wealthy markets are underperforming so
dramatically," he said, calling "this type of discrepancy... a huge red flag
for tax avoidance".

"Microsoft starves the public sector of much needed revenues" while it "makes
billions as a government contractor, with contracts at all levels of
government and in virtually every country", Cictar said.

In the past five years, Microsoft has signed public contracts worth at least
$3.3 billion in Britain, the United States, Australia and Canada, according
to the study.

Microsoft is under investigation by tax authorities in the United States and
other countries, including Australia, and "more than 80 percent of its total
foreign income is channelled through Puerto Rico and Ireland," the report
said.

"In fiscal year 2021 and 2020, our foreign regional operating centres in
Ireland and Puerto Rico," Microsoft said in its 2021 annual report

"Taxed at rates lower than the US rate, (they) generated 82 percent and 86
percent of our foreign income before tax."

Contacted by the report's authors, Microsoft said it respected "all local
laws and regulations" in the countries where it operates.

"We serve customers in countries all over the world and our tax structure
reflects that global footprint," the company said in a statement.