Microsoft has been inundated with criticism after it was revealed that the company avoided paying $29.6 billion in US taxes by keeping $92.9 billion of its earnings in offshore accounts.
This was disclosed after the company’s annual filings with the Securities and Exchange Commission was released. Insiders were surprised by the amount of money that Microsoft had kept overseas as it was a drastic increase from previous years.
Microsoft have insisted that they’ve done nothing wrong though. It has “not deferred U.S. income taxes” as the money in question was made from its “non-US subsidiaries” before it was then “reinvested outside the U.S.”
However some experts have declared that Microsoft used various loopholes and tax shelters to avoid paying the taxes that they owe to the United States.
When quizzed by International Business Times on the matter, a spokesperson for Microsoft simply referred the publication to the 2012 U.S. Senate testimony from William J Sample, who is the company’s corporate vice-president for worldwide tax.
Sample stated at the time: “Microsoft’s tax results follow from its business, which is fundamentally a global business that requires us to operate in foreign markets in order to compete and grow. In conducting our business at home and abroad, we abide by U.S. and foreign tax laws as written. That is not to say that the rules cannot be improved — to the contrary, we believe they can and should be.”
Over the last few years more and more US companies have been criticised for using offshore accounts and subsidiaries to avoid paying the US taxes that they owe. However these financial manipulations are still actually legal, even though they seriously reduce the amount of funds that the IRS receives. This is especially hard to take since the government is currently enforcing numerous budget deficits during this time of austerity.
In the past White House officials have called the endeavours of these companies an insult to “economic patriotism.” Back in July President Obama even criticised the “small but growing group of big corporations that are fleeing the country to get out of paying the taxes.”
When speaking about their decisions to “declare their base someplace else even though most of their operations are [in the US],” Obama declared: “I don’t care if it’s legal; it’s wrong.”
Obama has since insisted that Democratic lawmakers are now in the process of trying to push through a legislation that won’t allow these huge corporations the chance to avoid paying taxes by using these offshore subsidiaries.
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