Did Microsoft Shift Its Profits to Low-Tax Countries?
3 85Microsoft is apparently shifting its profits to countries with low taxes — and out of countries where they have many more employees and significant sales. Back in 2005 Former Microsoft CEO Steve Ballmer even said that a low corporate tax rate "is part of the overall advantage of doing business in Ireland," remembers long-time Slashdot reader theodp. (Ballmer added "It would be disingenuous to say otherwise.")
But in 2026 the EU now requires a country-by-country compliance report, and the New York Times notes that Microsoft "was most likely the first major U.S. technology company to make a so-called country by country report of its finances to comply..." Like other big companies, Microsoft uses transactions between subsidiaries to shift profits around to reduce its tax bill. The report revealed a consistent pattern: high returns in low-tax jurisdictions and slim margins in higher-tax ones. The report showed the sometimes absurd results. Microsoft said it had generated almost 40 percent of its pretax income in tax-friendly Ireland, where it employed about 3 percent of its global work force. In higher-tax Germany, the largest economy in Europe, Microsoft earned barely half of 1 percent of its global profits, it said.
Excluding Ireland, the company said, it generated less than 2 percent of its worldwide pretax earnings in Europe... [In Luxembourg Microsoft said it had $283 million in pretax income with only 34 employees.]
[America's] Internal Revenue Service is challenging profit-shifting transactions used by Microsoft, and is seeking back taxes of nearly $29 billion4. The company has said it disagrees with the I.R.S. and said in a securities filing that it "will vigorously contest" the proposed tax bills.
This week a Microsoft blog post offered their own "context," arguing that tax is "one important measure of contribution, but it is not the only one.
"Our investments, partnerships, infrastructure, and long-term presence in countries around the world also reflect a commitment to helping strengthen the economies and communities where we operate, today and for the future."
3 comments
Does a bear do something in the woods? (Score: 5, Interesting)
by shanen ( 462549 ) on Saturday July 04, 2026 @03:42PM (#66222452)
Gosh, I hate to feel like I'm put in the position of trying to defend a corporate cancer, even if the fine people of Microsoft have tried a little to mend a few of their evil ways, but I cannot pass by the low hanging fruit. Of COURSE they did it. You know they did it, and some more besides. (With apologies to Flip...) But they had to do it or they would have been crushed or acquired or worse by some bigger and meaner, dare I say more evil, corporate cancer that did a better job of retaining its earnings by using tax dodges.
I think there may be a root of the problem: When any dimension becomes too dominant, then the system tends to collapse along that dimension. Profit uber alles destroys everything in its path.
Solutions? A progressive tax on monopoly profits? Naw, that trick will never work. (With apologies to Rocky...)
Unfair on SMEs (Score: 5, Insightful)
by labnet ( 457441 ) on Saturday July 04, 2026 @04:47PM (#66222510)
Running a business with $15M turnover, we are not big enough to take advantage of big business shenanigans.
It peeves me off no end, that I pay 30% tax on profits while big multinationals spirit their profits off tax shelters.
I don’t mind paying the tax, as you need tax to provide for a modern society. I’m peeved multinationals are allowed to engage in tax fraud.
Re:Unfair on SMEs (Score: 5, Funny)
by PPH ( 736903 ) on Saturday July 04, 2026 @06:59PM (#66222664)
"I want either less corruption. Or more opportunity to engage in it."