Microsoft to Contest US Tax Authority’s Request to Pay Additional $28.9 Billion

Microsoft announced its intention to challenge the request of the United States tax authority to pay an additional $28.9 billion in unpaid taxes for the period from 2004 to 2013.

Microsoft to Contest US Tax Authority's Request to Pay Additional $28.9 Billion

Currently, the tax service is conducting an audit of how this technology giant distributes profits between countries and jurisdictions. In this case, the company adheres to the position that the mentioned authority conducts proceedings on the fact of what happened in the past, but is in no way related to the processes being implemented in the present.

The actions of the tax service in some sense reflect global concerns that large corporations are not paying enough taxes in different countries. The relevant assumptions, as demonstrated by the Microsoft case, already have concrete material consequences. At the same time, the technology giant has not yet paid the required amount and adheres to the position of refusing to fulfill the obligations imposed by the tax service.

Technology giants have repeatedly faced criticism for the fact that companies belonging to the corresponding status category often reported falling profits in countries where high taxes apply, and reported an increase in financial indicators in jurisdictions with a less strict tax regime. There is an opinion that this is a deliberate business practice aimed at minimizing the tax burden.

In a securities filing, Microsoft claims that the IRS is seeking not only an additional payment of $28.9 billion but also fines and interest. The tech giant insists it has always followed the rules and paid taxes in the United States and around the world.

Microsoft will appeal to the IRS. The relevant information is contained in the official statement of the technology giant. The company believes that the trial process will take several years. The technology giant also claims that as of September 30 of this year, all reserves for unforeseen income tax expenses were sufficient.

The company reported that since 2004 it has paid taxes in the United States in excess of $ 67 billion.

Microsoft also believes that any payments provided for by the audit results will be reduced to $10 billion based on laws passed by former President of the United States Donald Trump.

Other American technology companies, including Apple, Meta, and Amazon, have also been called upon to pay more taxes. For example, in 2016, in the EU, local authorities ordered the iPhone manufacturer to pay $14 billion in unpaid taxes. But in this case, the company did not comply with the requirement, since Brussels lost Apple’s appeal. The European authorities continue to try to get the payment.

This year, Microsoft has also been in the spotlight of other US authorities. In June, the tech giant agreed to pay $20 million to the Federal Trade Commission (FTC). This happened after it was found that the company was involved in the practice of illegally collecting information about children who have registered an account on Xbox.

In the near future, the tech giant may complete a deal to buy Activision Blizzard, which produces Call of Duty. The value of this business agreement is estimated at $68.7 billion. The implementation of this deal has faced obstacles from the FTC.

Serhii Mikhailov

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Serhii’s track record of study and work spans six years at the Faculty of Philology and eight years in the media, during which he has developed a deep understanding of various aspects of the industry and honed his writing skills; his areas of expertise include fintech, payments, cryptocurrency, and financial services, and he is constantly keeping a close eye on the latest developments and innovations in these fields, as he believes that they will have a significant impact on the future direction of the economy as a whole.