Technology giant Microsoft Corp has avoided billions in taxes in the UK, Australia and New Zealand, all places where it has lucrative public-sector contracts, because of its complex corporate structure, a study published yesterday 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 International 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.
Photo: Bloomberg
According to the study, Microsoft Global Finance ULC — an Irish subsidiary that has tax resident status in Bermuda — consolidated more than US$100 billion in investments and, despite an operating profit of US$2.4 billion, paid no tax in 2020.
In another example, Microsoft Singapore Holdings Pte posted profits from dividends of US$22.4 billion in 2020, but announced a tax liability of just US$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 3 to 4 percent,” said Jason Ward, a CICTAR analyst.
“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 US$3.3 billion in the UK, the US, Australia and Canada, the study said.
Microsoft is under investigation by tax authorities in the US and other nations, including Australia, and “more than 80 percent of its total foreign income is channeled through Puerto Rico and Ireland,” the report said.
“In fiscal year 2021 and 2020, our foreign regional operating centers in Ireland and Puerto Rico, taxed at rates lower than the US rate, generated 82 percent and 86 percent of our foreign income before tax,” Microsoft said in last year’s annual report.
Contacted by the report’s authors, Microsoft said it respected “all local laws and regulations” in the nations 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.
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
STILL LOADED: Last year’s richest person, Quanta Computer Inc chairman Barry Lam, dropped to second place despite an 8 percent increase in his wealth to US$12.6 billion Staff writer, with CNA Daniel Tsai (蔡明忠) and Richard Tsai (蔡明興), the brothers who run Fubon Group (富邦集團), topped the Forbes list of Taiwan’s 50 richest people this year, released on Wednesday in New York. The magazine said that a stronger New Taiwan dollar pushed the combined wealth of Taiwan’s 50 richest people up 13 percent, from US$174 billion to US$197 billion, with 36 of the people on the list seeing their wealth increase. That came as Taiwan’s economy grew 4.6 percent last year, its fastest pace in three years, driven by the strong performance of the semiconductor industry, the magazine said. The Tsai