Thursday, June 17

Microsoft’s Irish subsidiary paid zero corporate income tax of £ 220bn last year | Tax havens

An Irish subsidiary of Microsoft made a profit of $ 315bn (£ 222bn) last year, but did not pay corporate tax as it is “resident” for tax purposes in Bermuda.

The company, Microsoft Round Island One, posted profits last year roughly equal to nearly three-quarters of Ireland’s total gross domestic product (GDP), despite having zero employees.

The subsidiary, which charges license fees for the use of copyrighted Microsoft software around the world, posted an annual profit of $ 314.7 billion in the year to the end of June 2020, based on accounts filed with the Office. Register of Companies of Ireland. His earnings jumped from just under $ 10 billion the previous year and compares to Ireland’s GDP in 2020 of € 357 billion ($ 437 billion).

The revelation of how much money Microsoft has saved by routing through Ireland comes as world leaders strike a deal to finally tackle multinational tax evasion ahead of the G7 meeting in Cornwall later this month.

Microsoft Round Island One, whose registered address is at an office of the Matheson Law Firm, on the River Liffey in central Dublin, states in its accounts that it “has no employees other than the directors.” On your tax return it says, “As the company is a Bermuda tax resident, no income tax is charged.”

Bermuda does not levy corporation tax.

The company paid a dividend of $ 24.5 billion to Microsoft Corporation during the financial year, followed by an additional special dividend of $ 30.5 billion.

Proponents of tax transparency described the “tax aggression displayed by Microsoft and facilitated by Ireland” as “beyond credibility”.

Bill Gates's home in Seattle.
Bill Gates’ sprawling 66,000-square-foot main house overlooking Lake Washington near Seattle is valued at $ 130 million. Photograph: Ted Soqui / Corbis / Getty Images

The US Senate has previously investigated Microsoft and Ireland for the use of Microsoft Round Island One and other Irish subsidiaries to reduce taxes that might otherwise be owed in the US or elsewhere.

Former Senator Carl Levin, who was chairman of the Permanent Subcommittee on Investigations, said in 2012 that Microsoft and other technology companies were “probably the number one user of these offshore entities to transfer intellectual property.” The committee said Microsoft began in the 1990s to establish a “complex network of interrelated foreign entities to facilitate international sales and reduce” taxes.

A company spokesperson said: “Microsoft has been operating and investing in Ireland for over 35 years and is a long-time contributor, employer and contributor to the economy. Our organizational and tax structure reflects our complex global business. We fully comply with all local laws and regulations in the countries in which we operate. “

Paul Monaghan, executive director of the tax transparency campaign group Fair Tax Foundation, said: “The tax aggression that Microsoft displays and that Ireland facilitates is incredible.

“We have a holding company here that has posted $ 314.7 billion in profit, which is a figure not far below Ireland’s total national gross domestic product (GDP),” Monaghan said. “Even though dividends of $ 55 billion were paid to shareholders, not a penny of tax has been paid.

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“This race to the bottom in fiscal competitiveness is really unpleasant, especially at a time when countries around the world are trying to rebuild their post-covid public services. It is no longer defensible for a decent and responsible nation state to stand up and proclaim its democratic right to produce CFCs or lead additives, and limit the impact on the rest of the world. The same goes for enabling tax avoidance and evasion, which are toxic pollutants of the world’s financial systems. “

The giant US tech companies known as the “Silicon Six” (Microsoft, Amazon, Facebook, the owner of Google, Alphabet, Netflix and Apple) have been accused of paying $ 96 billion less in taxes over the past decade than tax figures. Theoreticals they cite in their annual financial reports.

The Guardian reported this week that companies paid $ 219 billion in income taxes over the past decade, equivalent to 3.6% of their total revenue of more than $ 6 trillion. Income tax is paid on profits, but the researchers said Silicon Six companies deliberately shift revenue to low-tax jurisdictions to pay less taxes.

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