Microsoft’s £23.5bn tax bill
Microsoft has been hit with a £23.5bn bill by the US Inland Revenue (IRS) in the latest twist in one of its biggest ever corporate tax disputes.
It focuses on how Microsoft distributed profits between countries between 2004 and 2013.
Critics say the practice, known as transfer pricing, is used by big U.S. firms to lower their tax bills by shifting profits to low-tax countries so they pay less in developed countries.
Other tech giants, including Amazon and Facebook, have faced calls to pay more taxes.
Microsoft will appeal the findings of the IRS audit, which could take years, saying it has paid more than £54.5 billion in US taxes since 2004.
Big blow: Microsoft will appeal the IRS audit findings, which could take years
“The main disagreement is the way Microsoft has allocated its profits during this period between countries and jurisdictions,” said Daniel Goff, head of global tax and customs.
“The Inland Revenue has established provisions that allow companies to use a specific transfer pricing arrangement called cost sharing. Many large multinational companies use cost sharing because it reflects the global nature of their business.
It said the bill could be cut by £8 billion because it did not reflect the laws passed by Donald Trump.
The company said: “We believe that we have always followed IRS rules and paid the taxes we owe in the US and around the world.”