Microsoft is saving almost 30 billion dollars in taxes by keeping $92.6 billion of earnings in accounts outside the United States, as mentioned in the company’s most recent annual filings with the Securities and Exchange Commission. The US government isn’t pleased with it, and finds that the software giant dodging its economic responsibilities.
Microsoft has admitted that it is keeping the said amount outside the nation, but it says that it hasn’t “deferred U.S. income taxes”. The company says that the money it has kept overseas was generated by its operations outside the United States, and it spends it outside the US as well.
The President Obama finds this practice wrong. “I don’t care if it’s legal; it’s wrong,” Obama said. “A small but growing group of big corporations that are fleeing the country to get out of paying taxes.”, he adds.
The problem is that Microsoft hasn’t declared itself a subsidiary of a foreign company. However, referring to a 2012 U.S. Senate testimony, a spokesperson said, “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.”
Microsoft is not the only company that has employed such practice. Its rival Apple too is said to keep a whopping sum of $138 billion outside the country. The US has the highest corporate tax rate of any country, charging as much as 35%.Further reading: Microsoft