The US Internal Revenue Service is demanding that it pay a staggering $29 billion in unpaid taxes from 2004 to 2013.
Microsoft fights US back tax claim: The case draws attention to the significant multinational corporations’ international tax practises. These corporations have been accused in recent years of moving money to countries with lower taxes in an effort to avoid paying greater taxes in their key markets.
In its submission to the US markets authorities, the company stated, “We disagree with the proposed adjustments and will vigorously contest the (demand) through the IRS’s administrative appeals office and, if necessary, judicial proceedings.”
Microsoft said in a blog post that the IRS’s problem during the time period was with its movement of revenue between international jurisdictions.
Cost-sharing is a method that “many large multinationals” employ since it represents the international scope of their operations, the corporation claimed.
The blog post continued, “We firmly believe that we have behaved in compliance with IRS rules and regulations, and that case law supports our viewpoint.”
“US IT Giants Face Scrutiny Over Tax Practices and Legal Challenges”
When contacted by AFP, the IRS stated that it was against US law for it to affirm or deny a tax case that was still pending.
Microsoft stated that the IRS appeals process would take years, and that if that failed, the business would challenge the claim in court.
The demand, according to the developer of Windows, was the result of a ten-year conversation with the IRS “about how we allocated our income and expenses for tax years beginning as far back as 2004.”
“We have changed our corporate structure and practises since the years covered by the audit, as a result, the issues raised by the IRS are relevant to the past but not to our current practises,” it stated.
Microsoft continued, saying, “Since 2004, we have paid over $67 billion in taxes to the US.”
Authorities have long had issues with the main US IT corporations’ accounting practises.
Governments have accused companies like Apple, Amazon, and Microsoft of moving money through low- or no-tax jurisdictions in order to avoid paying taxes in their primary markets and increase profits.
This led the Organisation for Economic Cooperation and Development (OECD) to mediate a significant international agreement including 140 nations in order to better distribute and manage the tax revenue of the giants.
In order to have it ratified by the end of the year, the OECD released a draught agreement on Wednesday that implements a significant portion of that agreement.
Authorities in the EU ordered Apple to pay $14 billion in back taxes in 2016 due to similar accounting practises, but Brussels lost Apple’s appeal and is now awaiting the result of a subsequent appeal.