Microsoft’s Irish Subsidiary Paid No Corporate Tax on £ 220 Billion Profit Last Year | Tax havens
An Irish subsidiary of Microsoft made a profit of $ 315 billion (Â£ 222 billion) last year but paid no corporate tax as it is “resident” for tax purposes in Bermuda.
The company, Microsoft Round Island One, posted profits last year equivalent to nearly three-quarters of Ireland’s total gross domestic product (GDP) – despite the lack of employees.
The subsidiary, which collects license fees for the use of copyright-protected Microsoft software around the world, reported an annual profit of $ 314.7 billion in the year through the end of June 2020, according to accounts filed with the Irish Companies Registration Office. Its profits jumped just under $ 10 billion the year before and compares to Ireland’s 2020 GDP of â¬ 357 billion ($ 437 billion).
The revelation of how much money Microsoft has saved by channeling through Ireland comes as world leaders strike a deal to tackle multinational tax evasion ahead of the G7 meeting in Cornwall later this month.
Microsoft Round Island One, headquartered in an office of Matheson law firm, on the River Liffey in central Dublin, states in its accounts that it has “no employees other than directors”. In its tax return, it says: âAs the company is resident for tax purposes in Bermuda, no income tax is payable.
Bermuda does not levy corporation tax.
The company paid a dividend of $ 24.5 billion to Microsoft Corporation during the year, followed by another special dividend of $ 30.5 billion.
Tax transparency activists have described “the tax aggression displayed by Microsoft and facilitated by Ireland” as “beyond belief”.
The US Senate has previously investigated Microsoft and Ireland using Microsoft Round Island One and other Irish affiliates to reduce taxes that might otherwise be owed in the United States or elsewhere.
A former senator, Carl Levin, who was chairman of the standing subcommittee on investigations, said in 2012 that Microsoft and other tech companies were “probably the first users of these offshore entities to transfer intellectual property.” The committee said Microsoft began in the 1990s to establish a “complex network of interdependent foreign entities to facilitate international sales and reduce” taxes.
A company spokesperson said: âMicrosoft has operated and invested in Ireland for over 35 years and is a long-time taxpayer, employer and contributor to the economy. Our organizational and fiscal structure reflects our complex global business. We fully comply with all local laws and regulations in the countries where we operate. “
Paul Monaghan, managing director of the tax transparency campaign group, the Fair Tax Foundation, said: âThe tax aggression displayed by Microsoft, and facilitated by Ireland, is beyond comprehension.
âHere we have a holding company that made $ 314.7 billion in profit, which is close to Ireland’s total national gross domestic product. Despite the payment of $ 55 billion in dividends to shareholders, not a penny of tax has been paid.
âThis race to the bottom in tax competitiveness is really distasteful, especially at a time when countries around the world are trying to rebuild their public services after Covid. It is no longer tenable for a decent and responsible nation state to stand up and proclaim its democratic right to produce CFCs or lead additives, and beg for the impact on the rest of the world. The same is true of facilitating tax avoidance and evasion, which are toxic pollutants of global financial systems.
US tech giants known as 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 course of the last decade than the theoretical tax figures they cite in their annual report. financial reports.
The Guardian reported this week that businesses have paid $ 219 billion in income taxes over the past decade, representing 3.6% of their total revenues of over $ 6 billion. Income tax is paid on profits, but the researchers said Silicon Six companies deliberately shift their income to low-tax jurisdictions to pay less tax.