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Monday 24 October 2016

Microsoft 'saved €127m a year in tax by booking sales through Ireland'

Published 20/06/2016 | 02:30

Bill Gates: Microsoft’s founder Photo: Tim Ireland/PA Wire
Bill Gates: Microsoft’s founder Photo: Tim Ireland/PA Wire

Microsoft has become the latest US multinational to have its tax affairs put under the spotlight, as it reportedly managed to avoid £100m (€127m) a year by booking sales through Ireland.

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The Washington State-based company, founded by Bill Gates, has allegedly sent more than £8bn of revenues from computers and software that were bought by British shoppers through to Ireland, to avail of a lower rate of corporation tax, according to an investigation by the 'Sunday Times'.

The newspaper claimed that elements of Microsoft's off-shore structure had received the blessing of the UK tax authorities. The UK's corporate tax rate, at 20pc, is much higher than Ireland's at 12.5pc, although the former is due to fall to 17pc by 2020.

The company is one of a number of high-profile multinational firms facing scrutiny of its business affairs.

In March, it emerged that social media giant Facebook would stop routing sales from major UK customers through Ireland, as pressure intensified across Europe, in particular on multinationals over their corporation tax bills.

Facebook said in a statement that the new arrangement -which was due to start in April - would provide greater "transparency".

The move will mean that the company will not rout advertising revenues from big clients like Tesco and WPP through Ireland, with the higher tax bill being paid from 2017.

And earlier in the year, Google agreed to pay £130m in back taxes to Britain, prompting criticism from politicians and campaigners who branded the figure "derisory".

Google had been under pressure in recent years over its practice of channelling most profits from European clients through Ireland to Bermuda, where it pays no tax on them.

The technology giant is also under the spotlight in France.

Dozens of French police raided Google's Paris headquarters last month, escalating an investigation on suspicions of tax evasion.

The company has stressed that it has been complying with French law and is co-operating with the authorities.

And the European Commission is probing the tax affairs of Apple in Ireland. Brussels has accused Ireland of striking a tax arrangement with Apple that was based on keeping jobs here but which gave the company an advantage that amounted to state aid and went against international guidelines.

Both the Irish Government and Apple have said they have no case to answer.

Irish Independent

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