Microsoft Challenges US Tax Authority’s $28.9 Billion Back Tax Demand
Microsoft has announced its intention to challenge a request from the US tax authority for an additional $28.9 billion (£23.5 billion) in back taxes for the period spanning 2004 to 2013, Excel Magazine International has gathered.
Recall the Internal Revenue Service (IRS) has conducted an audit focused on how the tech company distributes profits across various countries and jurisdictions.
Microsoft has stated that the concerns raised by the IRS pertain to historical matters and are not reflective of its current tax practices.
The ongoing issue of large corporations minimizing their tax liabilities in developed countries by reporting lower profits in high-tax regions and higher profits in lower-tax jurisdictions has long been a subject of debate.
In a securities filing, Microsoft revealed that the IRS is demanding the aforementioned $28.9 billion in additional taxes, along with associated penalties and interest.
Microsoft contends that it has consistently adhered to the IRS’s regulations and paid its taxes in both the United States and globally.
Furthermore, the company anticipates a potential reduction of up to $10 billion in the tax liability after the audit, citing tax laws enacted during the tenure of former President Donald Trump.
Similar demands for increased tax payments have been directed at other American tech giants, including Amazon and Facebook.
This year, Microsoft faced scrutiny from various US authorities, culminating in a $20 million settlement with the Federal Trade Commission (FTC) over illegal data collection from children who had created Xbox accounts.
Despite these challenges, Microsoft is on the brink of finalizing its acquisition of Activision Blizzard, the creator of Call of Duty, for a significant sum of $68.7 billion.
