How Microsoft legally avoided tens of millions in UK taxes
Microsoft uses well-known loophole to funnel profits out of country.
Microsoft has managed to avoid paying Her Majesty's due on £1.7 billion per year in UK revenues by exploiting a tax loophole that allows the company to funnel money through Luxembourg. Microsoft is simply the latest in a series of major corporations caught using the loophole. Microsoft says the loophole is legal.
This graphic from the UK Daily Mail shows how Microsoft routes its profits to avoid taxation.
The journey starts when someone in the UK purchases a Windows software product. The money is paid into an account in Luxembourg from whence it is transferred to Microsoft's European headquarters in Ireland. Ireland has about half the tax rate as the UK.
From Ireland, the money for dividends is sent along to Bermuda.
The past year along, her Majesty has been deprived of £159 million in revenues. And it's all apparently quite legal, for tax avoidance isn't the same as tax evasion.
However, this has raised the ire of many in the UK who believe the company should pay its share of revenues to Her Majesty, saying the money is enough to build a hospital or to help a great many people in need.
Microsoft isn't the first company to perform such gymnastics with their revenues. Amazon, Apple, Google, and even Starbucks have come under scrutiny for doing much the same thing.
Earlier this week, Starbucks, bowed by public pressure, agreed to pay the UK £20 million over the next two years.
For its part, Microsoft insists they have paid all applicable taxes and their methods are entirely legal. Microsoft does pay taxes in the UK, when the taxes are applicable. Indeed, if Microsoft is merely avoiding taxes, then a case can be made they are diligently doing what's required under their fiduciary responsibility as a corporation, which is to maximize shareholder profits.
As long as it's legal, of course.
There is no word yet on what Microsoft or Her Majesty plans to do, if anything, to resolve the current controversy.
© 2012, Distributed by NEWS CONSORTIUM.
- - -
Pope Benedict XVI's Prayer Intentions for January 2013
General Intention: The Faith of Christians. That in this Year of Faith Christians may deepen their knowledge of the mystery of Christ and witness joyfully to the gift of faith in him.
Missionary Intention: Middle Eastern Christians. That the Christian communities of the Middle East, often discriminated against, may receive from the Holy Spirit the strength of fidelity and perseverance.
Keywords: Microsoft, UK, taxes, evasion, Luxembourg
Rate This Article
Leave a Comment
More Technology News
- Navy dolphin discovers ancient naval torpedo
- Maybe climate change isn't so bad after all? Study shows prehistoric humans benefitted technologically from climate change
- California teenager invents device that can charge cell phone in 20 seconds - flat
- MULTIVERSE DISCOVERY - First solid proof of other universes besides ours
- Comet ISON may spark unprecedented meteor shower
- 'May God's love be with you' - First music video made in space!
- Online retail giant Amazon begins virtual coin collection
- Windows 8 goes sour as company announces U-turn
- Solar cataclysm! Sun threatens Earth with possible geomagnetic storm
- Fr. Paul Schenck: Finding Living Faith on Catechetical Sunday
- The Movie Yellow: Incest as 'Normal' and Cassavates's Slides Into the World of Woes
- The Chicago School Teachers Strike Reveals the Need For School Choice
- The Sexual Barbarians and the Dissolution of Culture
- The Happy Priest Challenges Us to Ask: Who is Jesus to Me?
- Michael Coren on Canadian Public Schools: Teachers, leave those kids alone
- We Cannot Ignore Our Consciences: Cardinal Dolan On Religious Liberty
- In the Face of Danger, Successor of Peter Travels to Lebanon as a Messenger of Peace
- Reflections on the Dignity and Vocation of Women: Who or What?